Exhibit 13


                          Staten Island Bancorp, Inc.
                        Tied to the Communities We Serve

                                      LOGO

<PAGE>

2001 Annual Report


Mission Statement: SI Bank & Trust is a strong financial services company
committed to improving shareholder value and delivering the highest quality
products and services responsive to the changing needs of our consumer and
business markets. As we grow, we will consistently strive to give extraordinary
service to our customers by providing our employees with the means and
opportunities to make full use of their skills and capabilities. These
commitments to our shareholders, customers and employees will enable the Company
to maintain a level of profitability necessary to remain independent for the
benefit of the communities we serve.


                                                                 [graphic-photo]

Corporate Profile: Staten Island Bancorp, Inc. ("SIB") was organized in 1997 and
is the holding company for SI Bank & Trust (the "Bank"), a federally chartered,
FDIC insured thrift institution, originally organized in 1864 under the name of
Staten Island Savings Bank. Headquarted in Staten Island, New York, the Bank
operates 17 full service branches and a trust department in Staten Island, New
York, two branches in Brooklyn, New York, six branches in Ocean County, New
Jersey, two branches in Monmouth County, New Jersey, three branches in Middlesex
County, New Jersey and three branches in Union County, New Jersey.


[graphic-map with bank locations]

Staten Island, NY..........  17
Brooklyn, NY...............   2
Union, NJ..................   3
Middlesex, NJ.............    3
Monmouth, NJ..............    2
Ocean, NJ.................    6

SI Bank & Trust also has a mortgage-banking subsidiary: SIB Mortgage Corp.,
d/b/a Ivy Mortgage. The principal business of the Bank consists of attracting
deposits from consumers and businesses in its market area and originating
consumer, residential, multi-family and commercial real estate loans, as well as
other business loans.

Staten Island Bancorp, Inc.'s common stock is publicly traded on the New York
Stock Exchange under the symbol "SIB."


<PAGE>

[graphic-graph depicting Total Assets (billions of dollars)]
[graphic-graph depicting Total Loans (billions of dollars)]
[graphic-graph depicting Total Deposits (billions of dollars)]

<TABLE>
<CAPTION>
Financial Highlights
Record Earnings At or For the Years Ended December 31,
(dollars in thousands, except per share data)         2001             2000           1999
------------------------------------------------------------------------------------------------
<S>                                             <C>              <C>              <C>
Operations Data
     Net interest income                        $     162,405    $     140,684    $     138,409
     Provision (benefit) for loan losses                8,757              652           (1,843)
     Total other income                               128,484           43,562           30,853
     Total other expenses                             168,570           96,760           82,971
     Income before provision for income taxes         113,562           86,834           88,134
     Provision for income taxes                        43,483           32,908           35,259
     Net income                                        70,079           53,926           52,875
------------------------------------------------------------------------------------------------
Financial Condition Data
     Total assets                               $   5,993,446    $   5,240,864    $   4,489,314
     Loans receivable, net                          2,806,619        2,847,660        2,150,039
     Loans held for sale, net                       1,187,373          116,163           46,588
     Securities available for sale, net             1,528,639        1,888,946        1,963,954
     Deposits                                       2,901,328        2,345,213        1,820,233
     Borrowed funds                                 2,451,762        2,241,011        2,049,411
     Stockholders' equity                             552,196          585,532          571,377
     Non-accruing assets                               16,320           10,669           13,361
     Net loan charge-offs                               3,354            1,132              503
     Allowance for loan losses                         20,041           14,638           14,271
------------------------------------------------------------------------------------------------
Selected Financial Ratios
     Stockholders' equity to total assets                9.21%           11.17%           12.73%
     Tangible equity to assets                           8.22            10.09            13.01
     Total risk-based capital                           14.36            18.77            25.58
     Net interest margin                                 3.10             2.99             3.50
     Interest rate spread                                2.50             2.22             2.60
     Return on average assets                            1.24             1.09             1.28
     Return on average equity                           12.27             9.61             8.44
     Efficiency ratio                                   56.05            49.41            47.70
     Non-accruing assets to total assets                 0.27             0.20             0.30
------------------------------------------------------------------------------------------------
Per Share Data
     Basic earnings                             $        1.16 $           0.80 $           0.70
     Diluted earnings                                    1.15             0.80             0.70
     Tangible book value                                 7.89             7.49             7.19
     Market value                                       16.31            10.69             9.00
     Cash dividends paid                                 0.32             0.26             0.21
------------------------------------------------------------------------------------------------
Selected Cash Ratios
     Cash return on average assets                       1.45%            1.30%            1.46%
     Cash return on average equity                      14.29            11.49             9.64
     Cash earnings per share:
       Basic                                    $        1.36 $           0.96 $           0.80
       Diluted                                           1.34             0.96             0.80

</TABLE>
<PAGE>

To Our Shareholders:

Since going public in December 1997, we have reported on our success in both
expanding our Company and increasing shareholder value by increasing earnings
per share. We are pleased to report to you that our results for the year 2001
allow us to continue that message.

In last year's annual report to shareholders we noted that we had undertaken two
major initiatives to position the Company for growth and enhanced revenues.
These initiatives consisted of expanding the retail bank franchise into the
State of New Jersey and expanding the geographic coverage and loan origination
volume of our mortgage company, SIB Mortgage Corp., while restructuring it for
more efficient and profitable operations. During the year 2001, both initiatives
produced very impressive results as Staten Island Bancorp, Inc. achieved another
year of record earnings.

The onset of a recession in the spring of 2001 in conjunction with eleven rate
cuts by the Federal Reserve brought the Fed Funds rate to below 2%, its lowest
level in forty years. These rate reductions resulted in considerable decreases
in the Company's cost of funds and stimulated significant increases in
residential lending volumes. Another positive outcome was the record level of
deposit growth and the decline in our cost for deposits.

The tragic events of September 11th not only exacerbated the declining economy,
but sent shockwaves throughout the communities in which we live and work, as
friends, neighbors and business associates were lost. The way in which our staff
responded to this tragedy depicts the true spirit of community banking, which we
will discuss later in this report.

Our Financial Results

Our financial performance for the year ended December 31, 2001 was truly
remarkable. The Company reported an increase in net income of 43.8% over prior
year's earnings on a diluted per share basis. Net income was $70.1 million or
$1.15 per diluted share as compared to $53.9 million or $0.80 per diluted share
for the year ended December 31, 2000. We also significantly surpassed all of
Wall Street's consensus EPS estimates.

Our interest margin improved to 3.31% as of December 31, 2001. The widening
margin was primarily due to a reduction in our cost of funds from an average of
5.29% for the fourth quarter of 2000, to 4.06% for the fourth quarter of 2001.
While the average cost of funds declined by 123 basis points, the average yield
on earning assets declined by only 63 basis points. A combination of factors
that included strong deposit growth in a lower interest rate environment, the
rollover of borrowed funds at a significantly lower cost and an increase in
higher yielding loans generated by the mortgage company and retained for
portfolio, all contributed to the improvement in the net interest margin.
Total assets increased by 14.4% and reached a record $6 billion at year-end
2001. Asset growth was driven by an increase in loans held for sale of $1.1
billion and was funded through an increase in retail deposits and to a lesser
extent, borrowings. We also took advantage of the lower rate environment to
restructure our portfolio and address our asset/liability objectives by selling
long-term fixed rate loans in our portfolio as well as newly originated lower
rate, long-term loans.

While the efficiency ratio for the Company was 56.1% in 2001, we were very
encouraged by the trend of this ratio for both the Bank and SIB Mortgage. The
efficiency ratio for the Bank remained stable while the efficiency ratio for SIB
Mortgage was reduced from 104.8% to 78.2% during the same period.



2
<PAGE>

[graphic-photo of James R. Coyle
President and Chief Operating Officer]

[graphic-photo ofHarry P. Doherty
Chairman and Chief Executive Officer]

o Assets reached $6 billion
o SIB Mortgage expansion into 42 states
o 43.8% growth in diluted EPS
o Market capitalization exceeded $1 billion
o Loan production of $4.9 billion
o Two-for-one stock split
o Deposit growth of 23.7%
o Completed seventh stock repurchase plan




In addition to the positive trend in the efficiency ratio for the Bank and SIB
Mortgage is the fact that our overall corporate overhead ratio, which is
measured by non-interest expense less non-interest income divided by net
interest income, was 24.6% in 2001. This places us in the highest performing
categories within our peer group.

While the Company has traditionally relied on borrowings to fund asset growth
since going public, during 2001 we were able to reduce our level of borrowings
as a percent of total assets from 42.8% to 40.9% due to stronger retail deposit
growth. In addition, the weighted average cost of borrowings decreased by 164
basis points as approximately 64% of generally higher rate borrowings
rolled-over and were re-priced in the lower rate environment in 2001. Loan
growth was also funded, in part, through a reduction in the securities portfolio
from $1.9 billion to $1.5 billion.

Total stockholders' equity equaled $552.2 million or 9.2% of total assets at
December 31, 2001. Return on stockholders' equity improved to 12.27% from 9.61%
for the year 2000. Our market capitalization increased from $746 million at
December 31, 2000 to $1.02 billion at December 31, 2001.

Effective use of stock buybacks continued throughout 2001. We began our eighth
buyback program on November 30, 2001 and by year-end 2001 we had repurchased a
total of 30.8% of our common stock since the initial public offering in December
1997. On November 19, 2001 the Company effected a 2 for 1 stock split in the
form of a dividend. This was our first split since going public and was
initiated in order to provide increased market liquidity for our common stock.

Our Lending Activity

Once again the Company achieved record loan volumes with over $4.9 billion in
originations, primarily driven by the successful expansion of the Company's
mortgage subsidiary, SIB Mortgage Corp. In total, the Company's loan sales
equaled $3.2 billion. SIB Mortgage Corp. achieved extraordinary growth in loan
originations, from $760 million in 2000 to $4.0 billion in 2001. Even with the
recession, home purchases and refinancing remained strong due to the favorable
interest rate environment. The growth in volume was accomplished through the
success of the five new offices added in 2000, and further expansion throughout
2001 in an additional 15 states, bringing our total geographic coverage to 42
states. With these new offices fully operational for the entire year, we believe
SIB Mortgage should maintain origination volumes throughout 2002, even if
refinancing slows down as the year progresses. As of December 31, 2001, SIB
Mortgage had $1.2 billion of loans in process.

The majority of SIB Mortgage's loan production is sold in the secondary market.
However, during 2001 the Bank retained $119 million of SIB Mortgage's higher
yielding Alt-A loans production as part of a balance sheet management strategy.

For the year ended December 31, 2001, SIB Mortgage generated net income for us
of $13.5 million, or $0.22 to our earnings per share. We are confident that SIB
Mortgage will continue its strong contribution to the Company's net income as we
continue to create efficiencies in operations and achieve the potential each of
the new offices has to offer.

The strength of our core lending activities in and around the markets served by
our branch network is reflected in the Bank's record $912.3



3
<PAGE>
[graphic-graph depicting Earnings Per Share (dollars)]

[graphic-photo  L. to R. Harry Doherty, Ralph Picarillo, James Coyle and
Richard Payne discuss SIB Mortgage's activity]


                "...SIB Mortgage generated net income for us of
              $13.5 million, or $0.22 to our earnings per share."


million of residential and commercial loan originations. The Bank's residential
lending volumes are supported by a strong wholesale broker program, which
accounts for about 80% of total business. The success of this program centers on
a staff dedicated to the highest quality of service for our broker members and
their clients. The availability of loan specialists for retail customers is also
an added benefit to those customers that choose to deal directly with the Bank.

Our reputation for service quality and product flexibility in the delivery of
loan products enables us to maintain a significant share of the competitive
market around our branch locations. In addition, we are constantly evaluating
ways in which we can capitalize on the opportunities presented in our relatively
new markets in the State of New Jersey. The modification and introduction of our
home equity products in the State of New Jersey will enable us to further extend
our relationship in consumer households and provide a valuable source of funds
for our retail and small business customers.

While single-family residential lending has been the backbone of our portfolio,
our efforts to expand our commercial loan portfolio continue to be successful
even though activities slowed in some segments of our portfolio due to the
recession. In 2001, we were able to increase our commercial real estate
portfolio through the origination of $325 million in loans. We understand that
done properly, commercial and business loans provide an excellent source of
higher yielding, interest rate sensitive assets as well as strong sources of fee
income. In addition, our approach to relationship lending in our branch markets
enables us to acquire the personal and trust business of our business customers
and their employees.

With the type of loan growth we have experienced, and continue to experience, it
is natural to evaluate credit quality, particularly during a recession year.
During the year we increased our loan loss reserve with a provision for
potential loan losses of $8.8 million in 2001 as compared to $652 thousand in
2000. The increase in the provision was due to several factors, including the
changing mix of the portfolio as we retained higher yielding Alt-A loans from
SIB Mortgage and increased originations of construction loans, primarily for
single-family homes. Our reserve coverage ratio amounted to 132.8% of
non-accruing loans at December 31, 2001 and the allowance for loan losses to
total loans amounted to 0.50%. The percentage of non-accrual loans to total
assets increased slightly to 0.27%, however given the expansion of the portfolio
and the recent economic environment, asset quality remains very strong.

Our Deposit Activity

As noted earlier, entering 2001 we were positioned for significant deposit
growth opportunities, having acquired a total of 11 branch locations in the
State of New Jersey in the prior year. We also continued our expansion in
Brooklyn, New York, following the late 2000 opening of our second branch
location in that county. We couldn't be more pleased with the results--by
year-end 2001 total deposits rose to $2.9 billion, an increase of $556.1 million
or 23.7%, with core deposits increasing to 62.6% of the total deposit base.

In New Jersey, we increased the deposit base by approximately 45% and deposits
in our Brooklyn, New York markets increased by over 50%. These increases were
accomplished through the introduction of a relationship money market account
that is linked to a checking account, on-line banking, a Visa Check Card,
bank-by-phone and other services. These


4
<PAGE>
[graphic-photo of Janet Valenza, branch manager (l) Mary Pat Parnaby, vice
president (seated) and Deborah Pagano, senior vice president (r), meet with the
student officers of "Kids Own Bank" in Mrs. Reischer's (2nd r) class at the
Bezalel Yeshiva in Lakewood, NJ.]

5
<PAGE>



[[graphic-photo of Elizabeth Dubovsky, executive director, SI Bank & Trust
Foundation (r) and Marlene Blum, vice president, SI Bank & Trust (2nd r) visit
with Liberta Macco and Nick Lettiere in the new kitchen for Meals on Wheels of
Staten Island, partially funded by the Foundation]



6


[graphic-photo of L. to R. Ira Hoberman, Donald Fleming, James Coyle, Deborah
Pagano and Frank Besignano review branch expansion opportunities]


[graphic-graph depicting  Total other income (millions of dollars)]

"...entering 2001 we were positioned for significant deposit growth
opportunities..."

results were enhanced by extensive staff development programs and aggressive
marketing and business development activities.

In our core market of Staten Island, we continue to maintain market share of
approximately 29% of total deposits. We believe our ability to retain such a
significant market share demonstrates the effectiveness of our retail and
business banking strategies, which center on the delivery of state-of-the art
services with the highest quality of personal service. Our goal is to remain
responsive to the shifts in customer needs and banking patterns. For example, in
the fourth quarter, we converted our PC banking customers from a software-based
application to the Internet. Our on-line banking and bank-by-phone services each
provide bill-payment capabilities along with inquiry and account transfer
transactions. The on-line banking service for businesses was also upgraded to
include wire transfers and automated clearing house (ACH) transactions.

As mentioned toward the beginning of this report, our low cost of deposits is a
major strength of our balance sheet. Approximately 17% of deposits are
non-interest bearing checking accounts, reflecting the large business account
segment of this base. The weighted average cost of our deposits was 2.58% at
December 31, 2001.

As we enter 2002, approximately $833 million in time deposits with a weighted
average rate of 4.02% will be available for renewal, of which $300 million with
a weighted average rate of 4.18% is due in the first quarter. Given the current
rate environment, we expect to continue to realize a reduction in our cost of
deposits.

As the year 2001 ended, we were in the process of opening an additional four
branches in New Jersey, expanding our network to fifteen across four counties in
the state. We anticipate continued success in these new markets as well as
further business generation in the 11 branches that were operating at the end of
2001.

Our Non-Interest Income Grows

We have always considered the over 100,000 households we serve as an excellent
source of potential for fee-based products. In 2001, we increased non-interest
income from this base by approximately $2.5 million, primarily due to an
increase in the size of the account base, expanded use of fee-based services
such as the Visa Check Card and an increase in the fees for certain services.

The efforts to grow our Trust and Investment Department are also producing
excellent results. Assets under management have increased to $289 million, while
revenue has doubled. Aggressive business development efforts in our core and new
markets as well as the continuation of the highest levels of service are factors
associated with this continued growth.

Our Community Service

Each year we share the community activities of our board, officers and staff
with you because we believe that these activities are at the core of our
position as a community bank. This has never been more evident than this past
year. The tragic events of September 11th caused us to deploy all of our
available volunteer resources in an effort to help the victims' families and
rescue efforts in various ways. Unfortunately, nearly 300 victims lived on
Staten Island and countless others lived in the New Jersey and Brooklyn
communities we serve. We have never been more proud of our staff for their
volunteerism. For example, our branches served as collection points for the
entire community when food and


7

<PAGE>
[graphic-photo of L. to R. John Brady, Harvey Singer and Edward Klingele discuss
asset mix strategies]


       "We know that the strength of our Company is tied to the strength
                    of the communities in which we serve..."


clothing was needed at the rescue site, and employees volunteered for the
delivery of those items to their required destination.

Also, in partnership with the SI Bank & Trust Foundation we participated in a
major fundraising effort for three relief organizations. Once again we
designated our branches as collection points for cash donations by the
community-at-large, and the Foundation matched these donations within prescribed
guidelines. In total, over $1 million was donated through this program.

Despite the considerable time, emotion and effort dedicated to this
unprecedented tragedy by our staff, the spirit of volunteerism of our staff is
also reflected by their support of other not-for-profit agencies as well. Each
year, a significant number of our employees donate their time, money and talent
to hundreds of local agencies in various ways. We continue to support programs
such as the Newspaper in Education which reaches thousands of children and
fundraising events for organizations like the March of Dimes, YMCA, Richmondtown
Historical Society and Snug Harbor Cultural Center.

While we have always considered the support of civic and charitable needs an
integral part of doing business in our communities, in the wake of September
11th we realized that at times we do it simply because it is the right thing to
do. In closing we entered 2001 positioned for solid growth and equally solid
returns for our shareholders. None of the results we achieved would be
accomplished without good employees. We will maintain our focus of retaining and
attracting employees that can help us successfully expand in new markets and
continue to produce superior results for our shareholders.

We also recognize the challenges that lie ahead, as the pace and strength of
economic recovery is uncertain. We know that the strength of our Company is tied
to the strength of the communities in which we serve, and that we bring value to
those communities through the products and services we offer, as well as through
the employees serving our customers.

On behalf of the Board of Directors, management and staff, we thank you for your
confidence and continued support as we face these challenges with the ongoing
objective of building long-term shareholder value paramount in our planning and
decision making.


/s/James R. Coyle                          /s/Harry P. Doherty
-----------------                          -------------------
James R. Coyle                             Harry P. Doherty
President and Chief Operating Officer      Chairman and Chief Executive Officer



8
<PAGE>


Staten Island Bancorp, Inc. and Subsidiary
Selected Consolidated Financial and Other Data


The following selected historical financial data 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>

                                                                                 December 31,
                                              ------------------------------------------------------------------------------------
(000's omitted, except share data)                  2001             2000             1999              1998            1997
                                              -------------    -------------   --------------     -------------    ------------
Selected Financial Condition Data:
<S>                                           <C>              <C>             <C>                <C>              <C>
Total assets                                  $   5,993,446    $   5,240,864   $    4,489,314     $   3,776,947    $  2,651,170
Securities available for sale, net                1,528,639        1,888,946        1,963,954         2,029,041       1,350,467
Loans receivable, net                             2,806,619        2,847,660        2,150,039         1,457,058       1,082,918
Loans held for sale, net                          1,187,373          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                                552,196          585,532          571,377           669,042         685,886
Tangible book value per share                          7.89             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
<CAPTION>

                                                                          For the Year Ended December 31,
                                              ------------------------------------------------------------------------------------
Selected Operating Data:                             2001             2000             1999              1998            1997
                                              -------------    -------------   --------------     -------------    ------------
<S>                                           <C>              <C>             <C>                <C>              <C>
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                                        128,484           43,562           30,853            10,380           7,454
Charitable contribution to
  SI Bank & Trust Community Foundation                 --               --               --                --            25,817
Other expenses                                      168,570           96,760           82,971            55,918          42,908
Income tax expense                                   43,483           32,908           35,259            29,678           4,932
Net income                                           70,079           53,926           52,875            44,262          14,549
Earnings (loss) per share fully diluted       $        1.15    $        0.80   $         0.70     $        0.53    $      (0.15)(3)
Cash dividends paid per share                 $        0.32    $        0.26   $         0.21     $        0.12    $         --
     At or For the Year Ended December 31,

<CAPTION>

Key Operating Ratios:                                2001             2000             1999              1998            1997
                                              -------------    -------------   --------------     -------------    ------------
<S>                                           <C>              <C>             <C>                <C>              <C>
Performance Ratios:(2)(3)
  Return on average assets                             1.24%            1.09%            1.28%             1.45%        0.70%
  Return on average equity                            12.27%            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                                    2.89%            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 loan losses to
  non-accruing loans at end of period                132.78%          149.74%          114.40%           102.37%       73.69%
  Allowance for loan losses to total
  loans at end of period                               0.50%            0.49%            0.65%             1.07%        1.42%
Capital Ratios:
  Average equity to average assets(3)                 10.11%           11.35%           15.17%            22.64%        8.96%
  Tangible equity to assets at end of period           8.22%           10.09%           13.01%            16.84%       24.78%
  Total capital to risk-weighted assets               14.36%           18.77%           25.58%            35.93%       59.62%
</TABLE>


(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.


                                       9
<PAGE>

Staten Island Bancorp, Inc. and Subsidiary
Management's Discussion and Analysis of Financial Condition and Results of
Operations



General. The following discussion is intended to assist in understanding the
financial condition and results of operations of Staten Island Bancorp, Inc.
(the "Company"). The information contained in this section 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 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 10.7% and its ratio of
interest-earning assets to interest-bearing liabilities maturing or repricing
within one year was 130.9%.

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 (the "Bank"). 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.



10
<PAGE>


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.

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 Office
of Thrift Supervision ("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>

                                                          Four to       More than        More than
                                         Within 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                301,290        532,935         183,997          56,493           9,185      1,083,900
  Other borrowings                         336,268        418,200         853,370         445,898         398,026      2,451,762
                                       -----------    -----------     -----------     -----------     -----------    -----------
  Total interest-bearing liabilities       755,972      1,306,379       1,346,782         680,316         797,643      4,887,092
                                       ===========    ===========     ===========     ===========     ===========    ===========
Excess (deficiency) of
  interest-earning assets over
  interest-bearing liabilities           1,086,176       (447,916)        (72,140)        (18,281)        100,947        648,786
                                       ===========    ===========     ===========     ===========     ===========    ===========
Cumulative excess (deficiency) of
  interest-earning assets over
  interest-bearing liabilities         $ 1,086,176    $   638,260     $   566,120     $   547,839     $   648,786
                                       ===========    ===========     ===========     ===========     ===========
Cumulative excess (deficiency) of
  interest-earning assets over
  interest-bearing liabilities as a
  percent of assets                          18.12%         10.65%           9.45%           9.14%         10.82%
                                       ===========    ===========     ===========     ===========     ===========
</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 $239.5 million
     or 4.0% of total assets.


11
<PAGE>


Staten Island Bancorp, Inc. and Subsidiary
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)


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.

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 $752.6 million or 14.4%
was driven by a record level of new originations of residential single-family
mortgage loans at the Bank's mortgage banking subsidiary, SIB Mortgage Corp.,
d/b/a "Ivy Mortgage" ("Ivy Mortgage" or the "Mortgage Company"). As a result of
the loan origination volume at the Mortgage Company, loans held for sale, net,
increased by $1.1 billion from 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 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. These two decreases were
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 certificates of
deposit ("CDs").

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 60.0% 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 40.9% 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 Federal Home Loan Bank ("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 $552.2 million at December 31, 2001 and $585.5
million at December 31, 2000, or 9.2% and 11.2% of total assets at such dates,
respectively. The decrease of $33.3 million was due to the repurchase of 7.4
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


12
<PAGE>


common stock being purchased for treasury at an aggregate cost of $289.5 million
and aggregate cash dividend payments of $21.2 million. These decreases were
partially offset by net income of $70.1 million, an allocation of Employee Stock
Ownership Plan ("ESOP") and Recognition and Retention Plan ("RRP") shares
resulting in an increase of $13.1 million, the exercise of 324,858 stock options
resulting in an increase of $4.1 million and an increase of $4.9 million in the
unrealized appreciation on securities available for sale, net of taxes. The
tangible book value per share was $7.89 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.
<TABLE>
<CAPTION>

                                                                           Years Ended December 31,
                                     -----------------------------------------------------------------------------------------------
                                                    2001                              2000                           1999
                                     ------------------------------    -----------------------------   -----------------------------
                                                            Average                          Average                         Average
                                      Average                Yield/    Average                Yield/   Average                Yield/
                                      Balance     Interest    Cost     Balance      Interest   Cost    Balance     Interest    Cost
                                                                         (000's omitted)
                                    ----------   ----------   ----   ----------  ----------    ----   ----------  ----------   ----
<S>                                 <C>          <C>          <C>    <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%  $1,739,898  $  131,978   7.59%
  Other loans                          115,454       10,537   9.13      107,699      10,426    9.68       77,054       7,219   9.37
                                    ----------   ----------          ----------  ----------           ----------  ----------
    Total loans                      3,481,537      259,412   7.45    2,648,279     204,554    7.72    1,816,952     139,197   7.66
Securities                           1,722,506      112,466   6.53    2,025,188     137,848    6.81    2,089,829     136,023   6.51
Other interest-earning assets(2)        43,065        1,105   2.57       25,743       1,402    5.44       49,679       2,253   4.53
                                    ----------   ----------          ----------  ----------           ----------  ----------
Total interest-earning assets        5,247,108      372,983   7.11    4,699,210     343,804    7.32    3,956,460     277,473   7.01
Non-interest-earning assets            400,447                          244,255                          173,512
                                    ----------                       ----------                       ----------
Total assets                        $5,647,555                       $4,943,465                       $4,129,972
                                    ==========                       ==========                       ==========
Interest-bearing liabilities:
Deposits:
  NOW and money
  market deposits                      330,278       10,309   3.12%     219,087       5,960    2.72%     165,071       4,152   2.52%
  Savings and escrow accounts          817,890       17,811   2.18      793,908      19,488    2.45      752,131      18,716   2.49
  Certificates of deposits           1,017,634       53,071   5.22      827,504      44,781    5.41      556,635      26,477   4.76
                                    ----------   ----------          ----------  ----------           ----------  ----------
    Total deposits                   2,165,802       81,191   3.75    1,840,499      70,229    3.82    1,473,837      49,345   3.35
Total borrowings                     2,399,963      129,387   5.39    2,147,718     132,891    6.19    1,674,990      89,719   5.36
                                    ----------   ----------          ----------  ----------           ----------  ----------
Total interest-bearing liabilities   4,565,765      210,578   4.61    3,988,217     203,120    5.09    3,148,827     139,064   4.42
Non-interest-bearing liabilities(3)    510,692                          394,180                          354,671
Total liabilities                    5,076,457                        4,382,397                        3,503,498
Stockholders' equity                   571,098                          561,068                          626,474
                                    ----------                       ----------                       ----------
Total liabilities and
  stockholders' equity              $5,647,555                       $4,943,465                       $4,129,972
                                    ----------                       ----------                       ----------
Net interest-earning assets         $  681,343                       $  710,993                       $  807,633
                                    ==========                       ==========                       ==========
Net interest income/
  interest rate spread                           $  162,405   2.50%              $  140,684    2.22%              $  138,409   2.60%
                                                 ==========   ====               ==========    ====               ==========   ====
Net interest margin                                           3.10%                            2.99%                           3.50%
                                                              ====                             ====                            ====
Ratio of average interest-earning
  assets to average
  interest-bearing liabilities                              114.92%                          117.83%                         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.


13
<PAGE>


Staten Island Bancorp, Inc. and Subsidiary
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)


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).
<TABLE>
<CAPTION>

                                                                      For the Year Ended December 31,
                                    ----------------------------------------------------------------------------------------------
                                               2001 compared to 2000                         2000 compared to 1999
                                    ---------------------------------------------   ----------------------------------------------
                                        Increase (decrease) due to                     Increase (decrease) due to
                                    --------------------------------   Total Net    --------------------------------    Total Net
                                                             Rate/     Increase                   Rate/                 Increase
                                       Rate      Volume      Volume    (Decrease)     Rate        Volume     Volume     (Decrease)
                                    --------    --------    --------    --------    --------    --------    --------    --------
                                                                           (000's omitted)
<S>                                 <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
Interest-earning assets:
Loans receivable:
  Real estate loans                 $ (6,288)   $ 63,077    $ (2,043)   $ 54,746    $    970    $ 60,735    $    446    $ 62,151
  Other loans                           (596)        750         (43)        111         240       2,871          95       3,206
                                    --------    --------    --------    --------    --------    --------    --------    --------
    Total loans receivable            (6,884)     63,827      (2,086)     54,857       1,210      63,606         541      65,357
Securities                            (5,619)    (20,603)        840     (25,382)      6,225      (4,207)       (193)      1,825
Federal funds sold and
  interest-bearing deposits             (741)        943        (498)       (296)        452      (1,085)       (218)       (851)
Total net change in income on
  interest-earning assets            (13,244)     44,167      (1,744)     29,179       7,887      58,314         130      66,331
                                    --------    --------    --------    --------    --------    --------    --------    --------
Interest-bearing liabilities:
Deposits:
  NOW and money market deposits          878       3,025         446       4,349         339       1,358         111       1,808
  Savings and escrow accounts         (2,200)        588         (66)     (1,678)       (253)      1,039         (14)        772
  Certificates of deposits            (1,626)     10,289        (373)      8,290       3,645      12,885       1,774      18,304
    Total deposits                    (2,948)     13,902           7      10,961       3,731      15,282       1,871      20,884
                                    --------    --------    --------    --------    --------    --------    --------    --------
Borrowings                           (17,102)     15,608      (2,009)     (3,503)     13,922      25,321       3,929      43,172
Total net change in expense
  on interest-bearing liabilities    (20,050)     29,510      (2,002)      7,458      17,653      40,603       5,800      64,056
                                    --------    --------    --------    --------    --------    --------    --------    --------
Net change in net interest income   $  6,806    $ 14,657    $    258    $ 21,721    $ (9,766)   $ 17,711    $ (5,670)   $  2,275
                                    ========    ========    ========    ========    ========    ========    ========    ========

</TABLE>

Comparison of Results of Operations for the Years Ended December 31, 2001 and
2000

General.

The Company reported net income of $70.1 million or $1.15 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. Core earnings for the year ended December 31, 2001 were $70.1 million or
$1.15 on a diluted per share basis compared to core earnings of $54.3 million or
$0.81 on a diluted per share basis for the year ended December 31, 2000. Core
earnings for the years ended December 31, 2001 and December 31, 2000 exclude net
securities losses of $107,000 and $569,000, respectively.

Cash earnings for the year ended December 31, 2001 were $81.6 million or $1.34
on a diluted per share basis compared to $64.5 million or $0.96 on a diluted per
share basis for the year ended December 31, 2000. The Company's cash earnings
are determined by adding back to reported net income the non-cash expenses
related to the allocations of the Company's common stock under its Employee
Stock Ownership Plan ("ESOP") and the earned portion of the Company's
Recognition and Retention Plan ("RRP") stock, net of respective tax benefits and
the amortization of the excess cost over fair value of net assets acquired
("goodwill").

The increase in net income for the year ended December 31, 2001 compared to the
year ended December 31, 2000 was primarily due to an $84.9 million increase in
other income and a $21.7 million increase in net interest income. These
increases were partially offset by a $71.8 million increase in other expenses, a
$10.6 million increase in the provision for income taxes and an $8.1 million
increase in the provision for loan losses.

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.

14
<PAGE>


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 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 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 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.


15
<PAGE>


Staten Island Bancorp, Inc. and Subsidiary
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)


Other Income.

During 2001, other income, exclusive of net securities gains and losses, was
$128.6 million compared to $44.1 million for 2000. The increase of $84.5 million
was primarily due to an $82.0 million increase in loan fees and gains and a $2.5
million increase in service and fee income. The increase in loan fees and gains
was due to the record volume of originations at the Mortgage Company resulting
in gains on loan sales of $92.6 million in the year ended 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 $107,000 compared to $569,000
for the year ended December 31, 2000. The net securities losses in 2001 resulted
from the sale of $212.3 million in securities during 2001 with the proceeds
being used primarily to fund loan originations.

Other Expenses.

Other expenses for the year ended December 31, 2001 were $168.6 million or 74.2%
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 $17.0 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 primarily due
to the expansion of the Mortgage Company, the increase in the non-cash expense
related to the ESOP due to the increase in fair market value of the common stock
which was released under the plan, increases in staff for loan originations and
loan servicing and normal merit pay increases. 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 $43.5 million for the year ended December 31,
2001 compared to $32.9 million for the year ended December 31, 2000. The
increase of $10.6 million in the provision for income taxes was primarily due to
a $26.7 million increase in net income before taxes and, to a lesser extent, the
increase in the effective tax rate from 37.9% for the year 2000 to 38.3% for the
year 2001. The increase in the effective tax rate was due to the increased
earnings of the Mortgage Company resulting in increased taxes due to the various
states in which it now operates.

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. Core earnings for the year ended December 31, 2000 were $54.3 million
or diluted earnings per share of $.81 compared to core earnings for the year
ended December 31, 1999 of $52.6 million or diluted earnings per share of $.70.
Core earnings for the year ended December 31, 2000 exclude $569,000 of net
securities losses. Core earnings for the year 1999 exclude a $1.8 million
benefit for loan losses, a $4.1 million curtailment gain on the freezing of the
Bank's defined benefit pension plan and $5.5 million in net securities losses.

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.

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


16

<PAGE>

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 68
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 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 $4.2 million
increase in service and fee income as a result of an 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. Loan fees increased $5.0 million
primarily due to the increase in net gains on loan sales and 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
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.


17
<PAGE>
Staten Island Bancorp, Inc. and Subsidiary
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)


Liquidity and Capital

The Company's liquidity, represented by cash and cash equivalents, is a product
of its operating, investing and financing activities. The Company's primary
sources of funds are deposits, amortization, 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 amortization 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.

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 $408.2 million or
6.94% of adjusted assets compared to a requirement of $88.2 million or 1.50% of
adjusted assets, core capital of $410.6 million or 6.98% of adjusted assets
compared to a requirement of $235.4 million or 4% of adjusted assets and risk
based capital of $427.8 million or 13.29% of risk weighed assets compared to a
requirement of $257.5 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.

Private Securities Litigation Reform Act Safe Harbor Statement

In addition to historical information, this Annual Report includes certain
"forward-looking statements" based on current management expectations. The
Company's actual results could differ materially, as defined in the Securities
Act of 1933 and the Securities Exchange Act of 1934, from those management
expectations. Such forward-looking statements include statements regarding our
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, the 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.

18
<PAGE>
<TABLE>
<CAPTION>
                                Staten Island Bancorp, Inc. and Subsidiary
                              Consolidated Statements of Financial Condition


December 31, 2001 and 2000                                                        2001           2000
---------------------------------------------------------------------------------------------------------
Assets                                                                 (000's omitted, except share data)
<S>                                                                          <C>              <C>
Assets:
  Cash and due from banks                                                    $   116,846      $    92,103
  Federal funds sold                                                              38,000           12,000
  Securities available for sale, at fair value                                 1,528,639        1,888,946
  Loans, net                                                                   2,806,619        2,847,660
  Loans held for sale, net                                                     1,187,373          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                                                                   189,558          158,757
                                                                             -----------      -----------
    Total assets                                                             $ 5,993,446      $ 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                                                     543,123          537,744
  Retained earnings                                                              340,270          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)
  Accumulated other comprehensive income (loss), net of tax                        1,917           (2,941)
      Total stockholders' equity                                                 552,196          585,532
                                                                             -----------      -----------
      Total liabilities and stockholders' equity                             $ 5,993,446      $ 5,240,864
                                                                             ===========      ===========
</TABLE>

The accompanying notes are an integral part of these statements.


19
<PAGE>
<TABLE>
<CAPTION>

Staten Island Bancorp, Inc. and Subsidiary
Consolidated Statements of Income


For the Years Ended December 31, 2001, 2000 and 1999                      2001           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:
  Service and fee income                                                 19,342         16,878         10,057
  Net gain on loan sales                                                 92,589         21,218         17,783
  Loan fees                                                              16,660          6,035          4,451
  Defined benefit plan curtailment gain                                    --             --            4,093
  Securities transactions, losses                                          (107)          (569)        (5,531)
                                                                      ---------      ---------      ---------
    Total other income                                                  128,484         43,562         30,853
                                                                      ---------      ---------      ---------
Other Expenses:
  Personnel                                                              61,511         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                                                168,570         96,760         82,971
                                                                      ---------      ---------      ---------
    Income before provision for income taxes                            113,562         86,834         88,134
Provision for Income Taxes                                               43,483         32,908         35,259
                                                                      ---------      ---------      ---------
    Net income                                                        $  70,079      $  53,926      $  52,875
                                                                      =========      =========      =========
Earnings per Share:
  Basic                                                               $    1.16      $    0.80      $    0.70
  Diluted                                                                  1.15           0.80           0.70
</TABLE>

The accompanying notes are an integral part of these statements


20
<PAGE>
<TABLE>
<CAPTION>
Staten Island Bancorp, Inc. and Subsidiary
Consolidated Statements of Changes in Stockholders' Equity


                                                                              Unearned               Accumulated
                                                               Unallocated    Common                    Other
For the Years Ended                               Additional     Common        Stock       Compre-  Comprehensive
December 31, 2001,                   Common       Paid-in      Stock Held     Held by     Treasury     hensive
2000 and 1999                         Stock        Capital       by ESOP        RRP         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
  (10,022,378 shares), at cost           --            --           --           --        (93,669)        --
  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                            --           2,776        2,747         --           --           --
  Earned RRP shares                      --           2,163         --          5,451         --           --
  Treasury stock purchases
  (7,354,688), at cost                   --            --           --           --       (104,362)        --
  Cash dividends paid                    --            --           --           --           --           --
  Exercise of 324,858
  stock options                          --             440         --           --          3,214         --
  Change in unrealized
  appreciation (depreciation)
  on securities, net of tax              --            --           --           --           --          4,858
  Stock dividends
  (45,130,312 shares)                     452          --           --           --           --           --
  Net income                             --            --           --           --           --         70,079
                                    ---------------------------------------------------------------------------
  Comprehensive income                                                                                $  74,937
                                                                                                      =========

Balance, December 31, 2001          $     903     $ 543,123    $ (30,215)   $ (14,333)   $(289,469)
                                    ===============================================================
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                     Retained     Income (Loss),
                                     Earnings      Net of Tax            Total
                                    ---------------------------------------------
                                    <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
  (10,022,378 shares), at cost           --               --             (93,669)
  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                            --               --               5,523
  Earned RRP shares                      --               --               7,614
  Treasury stock purchases
  (7,354,688), at cost                   --               --            (104,362
  Cash dividends paid                 (21,179)            --             (21,179)
  Exercise of 324,858
  stock options                           477             --               4,131
  Change in unrealized
  appreciation (depreciation)
  on securities, net of tax              --              4,858             4,858
  Stock dividends
  (45,130,312 shares)                    (452)            --                --
  Net income                           70,079             --              70,079
                                    ---------------------------------------------
  Comprehensive income
Balance, December 31, 2001          $ 340,270        $   1,917         $ 552,196
                                    =========        =========         =========
</TABLE>

The accompanying notes are an integral part of these statements


21
<PAGE>
<TABLE>
<CAPTION>

Staten Island Bancorp, Inc. and Subsidiary
Consolidated Statements of Cash Flows


For the Years Ended December 31, 2001, 2000 and 1999                         2001              2000           1999
----------------------------------------------------------------------------------------------------------------------
                                                                                         (000's omitted)
<S>                                                                     <C>              <C>              <C>
Cash Flows from Operating Activities:
  Net income                                                            $    70,079      $    53,926      $    52,875
  Adjustments to reconcile net income to net cash
  provided by (used in) operating activities--
      Depreciation and amortization                                           4,106            3,292            2,543
      (Accretion) and amortization of bond and mortgage premiums               (240)          (1,246)           4,715
      Amortization of intangible assets                                       5,343            5,179            2,236
      Realized loss (gain) on sale of available-for-sale securities             107              569           (3,539)
      Expense charge relating to allocation and earned
      portions of employee benefit plans                                     10,066            8,666            8,790
      Other non-cash income                                                  (6,568)          (5,987)          (1,439)
      Provision (benefit) for loan losses                                     8,757              652           (1,843)
      Increase (decrease) in deferred loan fees                              (1,326)          (5,086)           1,512
      (Increase) decrease in accrued interest receivable                      2,304           (3,085)          (4,232)
      Increase in other assets                                              (35,503)         (15,618)         (90,479)
      Increase in accrued interest and other liabilities                     12,527           17,865           12,103
      Decrease in deferred income taxes                                         235              324            4,691
      Recoveries of loans                                                       911            1,054            1,161
                                                                        -----------      -----------      -----------
        Net cash provided by (used in) operating activities                  70,798           60,505          (10,906)
                                                                        -----------      -----------      -----------
Cash Flows from Investing Activities:
  Maturities and amortization of available-for-sale securities              384,057          208,837          389,930
  Sales of available-for-sale securities                                    322,540          309,972           76,257
  Purchases of available-for-sale securities                               (337,028)        (159,473)        (517,115)
  Principal collected on loans                                            1,184,793          388,311          324,937
  Loans made to customers                                                (4,922,047)      (1,712,457)      (1,607,459)
  Purchase of loans                                                        (472,180)         (74,545)         (16,088)
  Sales of loans                                                          3,179,238          730,506          644,557
  Capital expenditures                                                      (10,368)          (5,396)          (4,961)
  Acquisition of First State Bank, net of cash acquired                        --            (46,688)            --
                                                                        -----------      -----------      -----------
        Net cash used in investing activities                              (670,995)        (360,933)        (709,942)
                                                                        -----------      -----------      -----------
Cash Flows from Financing Activities:
  Net increase in deposit accounts                                          556,115          196,740           91,172
  Net increase in advances from borrowers for taxes and insurance             5,961              729            3,714
  Increase in borrowings                                                    210,751          191,600          704,894
  Cash dividends paid                                                       (21,179)         (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                           650,940          303,133          689,137
                                                                        -----------      -----------      -----------
        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


22
<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. 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, as
discussed in Note 3. 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.

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.
<PAGE>

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 are carried at the lower of cost or market as determined by
outstanding commitments from investors or current investor yield requirements.

Mortgage Servicing Rights

Mortgage servicing rights ("MSRs") are the rights to service mortgage loans for
others and are acquired primarily through loan sales. Capitalized MSRs are
reported in intangible assets. After the serviced residential mortgage loan
portfolio is stratified by servicing type, loan type, rate type and interest
rate, the fair value of the MSR is determined using the present value of
estimated future cash flows, assuming a market discount rate and certain
forecasted prepayment rates based on the industry experience. MSRs are amortized
in proportion to, and over the period of, the estimated net servicing income of
the underlying financial assets. The assessment of impairment on MSRs is based
on the current fair value of those rights. Such impairment is recognized through
a valuation allowance established through a charge against gains on loan sales.

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


23

<PAGE>

Staten Island Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(continued)


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 Company's
entire loan portfolio.

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. Starting
in 2002, the Company will account for goodwill under the guidelines of SFAS No.
142, "Goodwill and Other Intangible Assets," which states that the amortization
of goodwill would be discontinued and that goodwill would be reviewed for
impairment and written down, if necessary, on an annual basis. Intangible assets
that have an identifiable life will continue to be amortized. The bank had
deposit premiums totaling $2.4 million reported in intangible assets that will
continue to be amortized over their useful life, resulting in amortization
expense of $483,000 in the year 2002. The remaining balance in goodwill of $52.9
million will be reviewed annually for impairment and written down, if necessary.

Segment Reporting

SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information," applies to public business enterprises and requires the reporting
of certain financial information about significant revenue-producing segments of
the business for which such information is available and utilized by the chief
operating decision maker. The information reported for the operating segments
would include a measure of revenues, expenses and total assets. 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.

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.

Income Taxes

Deferred income taxes are provided for temporary differences between items of
income or expense reported in the financial statements and those reported for
income tax purposes.

Common Stock

The Company on November 19, 2001 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 dilutive common stock equivalents
outstanding, adjusted for the unallocated portion of shares held by the Employee
Stock Ownership Plan ("ESOP") and unearned Recognition and Retention Plan
("RRP") in accordance with the Statement of Position 93-6.

Stock-Based Compensation

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
that is contained in Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," ("APB No. 25") and related
Interpretations. The Company has chosen to account for stock-based compensation
using the intrinsic value method as prescribed in APB No. 25, measuring
compensation cost for stock options as the excess, if any, of the quoted market
price of the Company's stock at the date of the grant over the amount an
employee must pay to acquire the stock.

Treasury Stock

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


24
<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
will adopt 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 $4,860,000 per annum and
anticipates no write-downs due to impairment at this time.

Reclassifications

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

 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 November 20, 1998, SIB Mortgage Corp. acquired substantially all of the
assets of Ivy Mortgage Corp., a New Jersey-based mortgage loan originator which
has branch offices primarily throughout the United States. The acquisition by
SIB Mortgage Corp. was funded by the Bank. The excess of the purchase price over
the fair value of the net assets acquired was approximately $1,775,000 and has
been recorded as goodwill and through December 31, 2001 was being amortized on a
straight-line basis over 15 years and will now be accounted for under the
guidelines of SFAS 142 for fiscal years after 2001.

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 through, December 31, 2001 was being amortized on a straight-line
basis over 15 years and will now be accounted for under the guidelines of SFAS
142 for fiscal years after 2001.

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
                                   ----------------------------------------------------
                                    Actual         Percent      Required        Percent
---------------------------------------------------------------------------------------
<S>                                <C>               <C>        <C>              <C>
SI Bank & Trust:
  Tangible capital                 $408,228          6.94%      $ 88,247         1.50%
  Core capital                      410,623          6.98        235,420         4.00
  Risk-based capital                427,838         13.29        257,506         8.00
Staten Island Bancorp:
  Tangible capital                 $487,244          8.22%          --        --
  Core capital                      489,639          8.25           --        --
  Risk-based capital                512,414         14.36           --        --



<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>

25
<PAGE>


Staten Island Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(continued)


As part of the IPO in December 1997, the Bank established, in accordance with
the requirements of the OTS, 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.

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
                           -------------------------------------------------------------
                                               Gross           Gross
                             Amortized     Unrealized        Unrealized        Market
                               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                        199,720           2,260          (23,653)         178,327
                           -----------     -----------      -----------      -----------
                             1,354,773          21,473          (24,442)       1,351,804
                           -----------     -----------      -----------      -----------
Marketable
  equity securities:
    Common stocks               16,279           4,461             (996)          19,744
    FLHB 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           $ 1,525,533     $    30,363      $   (27,257)     $ 1,528,639
                           ===========     ===========      ===========      ===========
<CAPTION>

                                                  December 31, 2000
                           -------------------------------------------------------------
                                               Gross           Gross
                             Amortized     Unrealized        Unrealized        Market
                               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              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             93,334         84,390        124,158        121,221
Due after ten years            138,679        126,510        124,622        113,541
                            ----------     ----------     ----------     ----------
                               256,231        235,879        348,832        335,984
GNMA, FNMA, FHLMC
  and CMO mortgage
  participation
  certificates               1,098,542      1,115,924      1,347,889      1,349,247
                            ----------     ----------     ----------     ----------
                            $1,354,773     $1,351,803     $1,696,721     $1,685,231
                            ==========     ==========     ==========     ==========
</TABLE>

Proceeds from sales 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 $6,493,000,
$8,709,000 and $14,407,000, respectively. Gross losses in 1999 include
write-downs of approximately $9,000,000 on securities whose decline in value was
deemed to be other than temporary.



26
<PAGE>


The Bank holds a number of investment grade asset-backed securities in its
corporate portfolio. Two issues with a total par value of $10,000,000 have a
market value significantly below par although interest payments are current and
we presently believe, based on information made available to us, there is
sufficient collateral available to repay these obligations at maturity. The
unrealized depreciation in the value of these securities, net of taxes, has been
reflected through the capital accounts since all securities in the portfolio are
identified as available for sale. In the event the Company determines that an
other than temporary impairment in value has occurred in either of these issues,
the Company would recognize a charge to current earnings.

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            2000
                                                   -----------      -----------
                                                           (000's omitted)
<S>                                               <C>              <C>
Loans secured by mortgages on real estate:
  1-4 family residential                           $ 2,062,336      $ 2,206,972
  Multi-family properties                               48,783           49,034
  Commercial properties                                335,821          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                                            42,962           52,980
  Other Consumer                                        60,292           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>

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 totaled $15,093,000 at December 31, 2001, which is also the
Company's recorded investment in loans for which impairment has been recognized
in accordance with SFAS No. 114 and SFAS No. 118. Non-accrual loans totaled
$9,776,000 at December 31, 2000. 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.

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 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 $13,882,000 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 Company had mortgage servicing rights of
$3,458,000 and $3,053,000, respectively.

At December 31, 2001 and 2000, the Bank had balances outstanding from various
officers totaling $6,004,000 and $5,706,000, respectively. During 2001, there
were loan originations of $563,000 and loan repayments of $265,000 on the loans
held by various officers of the Bank.


27
<PAGE>
Staten Island Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(continued)


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>                     <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.
<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>
Reverse
  Repurchase
Agreements
Non-FHLB                  $  432,435          4.45%  $  629,974          6.15%
Reverse
  Repurchase
Agreements
FHLB                         228,000          5.39      263,000          5.40
FHLB Advances              1,725,000          4.67    1,348,000          6.51
Mortgage
  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
                                                               Average
                                            Amount              Rate
--------------------------------------------------------------------------------
<S>         <C>                          <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
                           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.

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
    Service cost                                           --              --
    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>


28
<PAGE>

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
    Employer contributions                                    --             --
    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>

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)
Actual 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                              7.00%          7.25%          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>

During 1999, 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 obligation:
  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>

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 6.5% and
grading to 5% in 2004 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 and
2000 was matched through stock contributions under the ESOP. Amounts charged to
operations for the years ended December 31, 2001, 2000 and 1999 were
approximately $646,000, $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 will be in an amount proportional
to repayment of the ESOP loan. Shares allocated will first be 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 will be 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 and 2000. The Company recorded compensation expense
of $3,428,000, $1,773,000 and $2,255,000 for the ESOP for the years ended
December 31, 2001, 2000 and 1999, respectively.


29
<PAGE>


Staten Island Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(continued)


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 plan:
<TABLE>
<CAPTION>

                               2001                        2000                    1999
------------------------------------------------------------------------------------------------
                      Number          Weighted     Number       Weighted    Number      Weighted
                      of              Average      of           Average     of          Average
                      Shares           Price       Shares        Price      Shares       Price
                      ------           -----       ------        -----      ------       -----
<S>                   <C>             <C>          <C>          <C>         <C>          <C>
Granted                  --            $   --       58,400       $ 8.93      36,400      $  9.32
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 "Option Plan"). The
Company has reserved for future issuance pursuant to the Option Plan 8,596,250
shares of common stock, which amount is equal to 10% of the common stock sold in
the Conversion. Under the 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 has chosen to account for stock-based compensation using the
intrinsic value method prescribed in APB No. 25. Since each option granted at a
price equal to the fair market value of one share of the Company's stock on the
date of the grant, no compensation cost has been recognized. The following table
compares reported net income and earnings per share with net income and earnings
per share on a pro forma basis, assuming that the Company accounted for
stock-based compensation under SFAS No. 123. The effects of applying SFAS No.
123 in this pro forma disclosure are not indicative of future amounts.
<TABLE>
<CAPTION>

                                     2001             2000              1999
--------------------------------------------------------------------------------
                                                 (000's omitted)
<S>                            <C>               <C>               <C>
Net income:
  As reported                  $   70,079        $   53,926        $   52,875
  Pro forma                        67,722            50,396            47,341
Earnings per share:
  As reported--
    Basic                            1.16              0.80              0.70
    Diluted                          1.15              0.80              0.70
  Pro forma--
    Basic                            1.13              0.75              0.62
    Diluted                          1.11              0.75              0.62
</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
----------------------------------------------------------------------------------
<S>                                     <C>             <C>             <C>
Options outstanding,
  beginning of year                     6,155,600       6,092,000       6,112,000
    Options granted                     1,484,920          90,000         182,000
    Options exercised                    (324,858)           --              --
    Options forfeited                     (69,400)        (26,400)       (202,000)
                                        ---------       ---------       ---------
Options outstanding,
  end of year                           7,246,262       6,155,600       6,092,000
                                        =========       =========       =========
Remaining options available
  for grant under plan                  1,025,130       2,440,650       2,504,250
Exercisable options,
  end of year                           3,391,542       2,516,800       1,252,400
Weighted average exercise
  price on exercisable options
  end of year                          $    11.40      $    11.41      $    11.44
Weighted average fair
  value of options granted             $     3.84      $     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:
<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>


30
<PAGE>


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 annual benefit is based upon annual salary
(as defined) plus interest. Amounts charged to operations for the years ended
December 31, 2001, 2000 and 1999 were approximately $240,000, $407,000 and
$458,000, 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                            $34,202           $22,790           $26,353
  State                                3,343             1,727             2,778
  City                                 1,423             1,801             2,776
                                     -------           -------           -------
                                      38,968            26,318            31,907
Deferred                               4,515             6,590             3,352
                                     -------           -------           -------
                                     $43,483           $32,908           $35,259
                                     =======           =======           =======
</TABLE>

The following table reconciles the federal statutory rate to the Company's
effective tax rate:
<TABLE>
<CAPTION>

                                                             December 31, 2001
                                                       ------------------------------
                                                                        Percentage of
                                                         Amount         Pretax Income
-------------------------------------------------------------------------------------
                                                               (000's omitted)
<S>                                                    <C>                  <C>
Federal tax at statutory rate                          $ 39,747             35.0%
State and local income taxes                              2,649              2.3
Tax-exempt dividend income                                 (897)            (0.8)
Amortization of goodwill                                  1,777              1.6
Other                                                       207              0.2
                                                       --------             ----
  Income tax provision                                 $ 43,483             38.3%
                                                       ========             ====
<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)
Amortization of goodwill                                  1,738              2.0
Other                                                      (430)            (0.5)
                                                       --------             ----
  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)
Amortization of goodwill                                    318              0.4
Other                                                     1,044              1.2
                                                       --------             ----
  Income tax provision                                 $ 35,259             40.0%
                                                       ========             ====
</TABLE>

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                                     19,369                25,340
                                                 --------              --------
                                                 $ (6,998)             $ 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                     $ 2,332     $ 5,537
  Allowance for loan losses                        8,869       5,868
  Postretirement benefit accrual                   2,277       1,984
  Non-accrual loans                                  755         517
  Deferred compensation                              987         975
  ESOP shares                                      2,021       1,485
  Unrealized loss on AFS securities                 --         6,049
  Deposit premium                                  1,159        --
  Other                                           10,168       8,969
                                                 -------     -------
    Total assets                                  28,568      31,384
                                                 -------     -------
Liabilities:
  Bad debt recapture under Section 593               833       1,250
  Pension plan and curtailment gain                2,872       2,288
  Fixed-asset tax basis adjustment                   722         662
  Bond discounts                                   1,527       1,115
  Unrealized gain on AFS securities                1,309        --
  Loan servicing asset                             1,583        --
  Other                                              353         729
                                                 -------     -------
    Gross deferred tax liability                   9,199       6,044
                                                 -------     -------
    Net deferred tax asset                       $19,369     $25,340
                                                 =======     =======
</TABLE>

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

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%.


31
<PAGE>

Staten Island Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(continued)


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 $1,190,000.

The New York State 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 tax
liability. This change also provides for an indefinite deferral of the recapture
of the bad debt reserves generated for New York State purposes.

The New York City tax law was also amended and is similar to the New York State
tax law regarding bad debt reserves and provides for the indefinite deferral of
the recapture of bad debt reserves generated for New York City purposes. Prior
to the tax law changes mentioned above, for New York State and New York City
purposes, the bad debt deduction was equal to a multiple of the federal bad debt
deduction, which is approximately four times the federal amount.

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 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.

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):


                                     2002          $1,922
                                     2003           1,481
                                     2004           1,334
                      2005 and thereafter           3,832
                                                   $8,569

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.

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.


32
<PAGE>


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.

Loan Commitments

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

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


                                                          December 31, 2001
                                                  ------------------------------
                                                     Carrying            Fair
                                                      Amount             Value
--------------------------------------------------------------------------------
<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                                             4,014,033          4,112,895
    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

<CAPTION>

                                                          December 31, 2000
                                                  ------------------------------
                                                     Carrying            Fair
                                                      Amount             Value
--------------------------------------------------------------------------------
<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>

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.
<PAGE>
<TABLE>
<CAPTION>

                                                       For the Year Ended
                                                       December 31, 2001
                                              -------------------------------------
                                                           Weighted
                                                            Average          Per
                                                 Net        Shares          Share
                                               Income     Outstanding       Amount
-----------------------------------------------------------------------------------
                                                       (000's omitted, except
                                                          per share amounts)
<S>                                           <C>            <C>          <C>
Basic EPS:
  Net income                                  $70,079        60,180       $   1.16
Effect of Dilutive Securities:
  Incremental shares from
  assumed exercise of
  outstanding options                            --             560          (0.01)
                                              -------        ------       --------
Diluted EPS                                   $70,079        60,740       $   1.15
                                              =======        ======       ========

<CAPTION>

                                                       For the Year Ended
                                                       December 31, 2000
                                              -------------------------------------
                                                           Weighted
                                                            Average          Per
                                                 Net        Shares          Share
                                               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
                                              =======        ======       ========
<CAPTION>

                                                       For the Year Ended
                                                       December 31, 1999
                                              -------------------------------------
                                                           Weighted
                                                            Average          Per
                                                 Net        Shares          Share
                                               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>

33
<PAGE>

Staten Island Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(continued)


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.

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 principals.

Segment Reporting Table
<TABLE>
<CAPTION>

                                              December 31, 2001
                       -------------------------------------------------------------
                                                         Elimination of
                            Mortgage      Community       Intersegment
                            Banking        Banking          Items            Total
------------------------------------------------------------------------------------
                                                (000's omitted)
<S>                    <C>              <C>             <C>              <C>
Operating revenue      $   121,833      $   169,975     $      (919)     $   290,889
Operating expenses          95,522           73,048            --            168,570
Net income                  13,461           57,537            (919)          70,079
Assets at year-end       1,486,484        4,507,881            (919)       5,993,446

<CAPTION>

                                              December 31, 2000
                       -------------------------------------------------------------
                                                         Elimination of
                            Mortgage      Community       Intersegment
                            Banking        Banking          Items            Total
------------------------------------------------------------------------------------
                                                (000's omitted)
<S>                    <C>              <C>             <C>              <C>
Operating revenue      $    29,030      $   156,769     $      (984)     $   184,815
Operating expenses          30,639           66,121            --             96,760
Net income                  (1,291)          56,201            (984)          53,926
Assets at year-end         310,923        4,930,925            (984)       5,240,864

<CAPTION>

                                              December 31, 1999
                       -------------------------------------------------------------
                                                         Elimination of
                            Mortgage      Community       Intersegment
                            Banking        Banking          Items            Total
------------------------------------------------------------------------------------
                                                (000's omitted)
<S>                    <C>              <C>             <C>              <C>
Operating revenue      $    22,155      $   153,544     $      (907)     $   174,792
Operating expenses          25,579           57,392            --             82,971
Net income                  (2,308)          56,090            (907)          52,875
Assets at year-end          59,688        4,403,533            (907)       4,462,314

</TABLE>

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.


34
<PAGE>

Condensed Statements of Financial Condition
<TABLE>
<CAPTION>
                                                     December 31,
                                             ------------------------
                                                 2001         2000
--------------------------------------------------------------------------------
                                                  (000's omitted)
<S>                                          <C>            <C>
Assets:
  Cash                                       $   9,819      $   9,980
  Securities available for sale                 69,450        118,849
  Investment in Bank                           469,914        441,961
  ESOP loan receivable from Bank                34,631         36,497
  Other assets                                  11,419         13,007
                                             ---------      ---------
    Total assets                             $ 595,233      $ 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                   543,123        537,744
  Retained earnings                            340,270        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                      1,917         (2,941)
                                             ---------      ---------
      Total stockholders' equity               552,196        585,532
                                             ---------      ---------
      Total liabilities and
  stockholders' equity                       $ 595,233      $ 620,294
                                             =========      =========

</TABLE>

Condensed Statements of Income
<TABLE>
<CAPTION>

                                                              December 31,
                                             ----------------------------------------
                                                 2001           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                              68,575         49,450         48,712
                                             ---------      ---------      ---------
    Net income                               $  70,079      $  53,926      $  52,875
                                             =========      =========      =========
</TABLE>

Condensed Statements of Cash Flows
<TABLE>
<CAPTION>

                                                              December 31,
                                             ----------------------------------------
                                                 2001           2000           1999
-------------------------------------------------------------------------------------
                                                          (000's omitted)
<S>                                          <C>            <C>            <C>
Cash flows from operating activities:
  Net income                                 $  70,079      $  53,926      $  52,875
  Adjustments to reconcile net income
  to net cash provided by operating
  activities--
      Undistributed earnings of Bank           (68,575)       (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                                     695           (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                           5,222          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        75,870         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                         113,287         56,010         88,446
                                             ---------      ---------      ---------
Cash flows from financing activities:
  Increase in borrowings                         6,871         33,191           --
  Dividends paid                               (21,179)       (18,764)       (16,974)
  Purchase of treasury stock                  (104,362)       (67,172)       (93,669)
                                             ---------      ---------      ---------
          Net cash used in
  financing activities                        (118,670)       (52,745)      (110,643)
                                             ---------      ---------      ---------
          Net increase (decrease) in
  cash and cash equivalents                       (161)         6,498        (10,526)
Cash and cash equivalents,
  beginning of year                              9,980          3,482         14,008
                                             ---------      ---------      ---------
Cash and cash equivalents,
  end of year                                $   9,819      $   9,980      $   3,482
                                             =========      =========      =========

</TABLE>

35
<PAGE>


Staten Island Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(continued)


17. 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
--------------------------------------------------------------------------------------
                                           (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                  46,492        30,162       20,953        11,642
  Securities transactions                (171)           61            9            (6)
  Non-interest expense                 56,819        43,446       38,745        29,560
  Income before income taxes           35,585        30,874       24,898        22,205
  Income taxes                         13,339        12,200        9,735         8,209
  Net income                           22,246        18,674       15,163        13,996
  Earnings per share--
    Basic                                0.38          0.31         0.25          0.22
    Diluted                              0.37          0.31         0.25          0.22
    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


<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                4,573         4,262        3,903         4,079
  Loan fees and gains                   9,096         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>

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


36

<PAGE>

Corporate Information

STATEN ISLAND BANCORP INC.

Directors
Harold Banks
James R. Coyle
Harry P. Doherty
William G. Horn
Denis P. Kelleher
Julius Mehrberg
John R. Morris
William E. O'Mara
Allan Weissglass

Directors Emeriti

Charles J. Bartels
Elliott L. Chapin
Pio Paul Goggi
Dennis E. Knudsen
Kenneth W. Nelson
Edward F. Norton, Jr.
Edward F. Vitt
Raymond A. Vomero

Officers of Staten Island
Bancorp Inc.

Harry P. Doherty
  Chief Executive Officer
James R. Coyle
  Chief Operating Officer
Edward Klingele
  Chief Financial Officer
Patricia A. Smith
  Corporate Secretary


CORPORATE OFFICE

15 Beach Street
Staten Island, New York 10304

ANNUAL MEETING

The annual meeting of stockholders will be held on May 2, 2002 at 10:00 a.m. at
the Excelsior Grand, 2380 Hylan Boulevard, Staten Island, New York, 10306.
Notice of the meeting and a proxy form are included with this mailing to
shareholders of record as of March 22, 2002.

INVESTOR RELATIONS

Shareholders, analysts and others interested in additional information may
contact:

Donald C. Fleming
Senior Vice President
15 Beach Street
Staten Island, New York 10304
(718) 556-6518
www.sibk.com

<PAGE>

SI Bank & Trust --
A Staten Island Bancorp Company

Senior Officers

Harry P. Doherty
  Chairman and Chief Executive Officer
James R. Coyle
  President and Chief Operating Officer
John P. Brady
  Executive Vice President
Ira Hoberman
  Executive Vice President
Frank J. Besignano
  Senior Vice President
Donald C. Fleming
  Senior Vice President
Edward Klingele
  Senior Vice President
Deborah Pagano
  Senior Vice President


TRANSFER AGENT AND REGISTRAR

Inquiries regarding stock transfer, lost certificates, or changes in name and/or
address should be directed to the stock and transfer
agent and registrar:

Registrar and Transfer Company
Investor Relations
10 Commerce Drive
Cranford, New Jersey 07016
(800) 368-5948

STOCK LISTING

Staten Island Bancorp Inc.'s common stock is traded on the New York Stock
Exchange (NYSE) under the symbol SIB.

Shares outstanding as of January 1, 2002:
  62,487,286

Shareholders of record as of January 1, 2002:
  8,669

<PAGE>

SIB MORTGAGE CORPORATION--
d/b/a IVY MORTGAGE

Richard W. Payne
  President and Chief Executive Officer
Paul Heckman
  Executive Vice President
Ralph Picarillo
  Executive Vice President, Treasurer and
Chief Financial Officer
SIB INVESTMENT CORP.
Bernard Durnin
  President


INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS

Arthur Andersen LLP
1345 Avenue of the Americas
New York, New York 10105

COUNSEL

The Law Firm of Hall & Hall
57 Beach Street
Staten Island, New York 10304


Elias, Matz, Tiernan & Herrick, LLP
734 15th Street N.W., 12th fl.
Washington, D.C. 20005


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