<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549
                                        

                                   FORM 10-Q


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

For the quarterly period ended March 31, 1999        Commission File No. 0-23271


                        RICHMOND COUNTY FINANCIAL CORP.
            (Exact name of Registrant as specified in its charter)


              Delaware                                06-1498455
      (State of Incorporation)         (I.R.S. Employer Identification Number)


                             1214 Castleton Avenue
                        Staten Island, New York 10310
              (Address of principal executive offices) (Zip Code)

                                 718-448-2800
             (Registrant's telephone number, including area code)


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

                           Yes  X       No ________
                              -----                

Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date.


As of May 12, 1999, there were 32,142,634 shares of the common stock
outstanding.
<PAGE>
 
                                   FORM 10-Q
                        RICHMOND COUNTY FINANCIAL CORP.
                                     INDEX

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C> 
PART I.  FINANCIAL INFORMATION

ITEM 1. Financial Statements (Unaudited)
 
Consolidated Statements of Financial Condition
at March 31, 1999 and June 30, 1998..................................         3             
                                                                              
Consolidated Statements of Operations                                         
for the three and nine months ended March 31, 1999 and 1998..........         4
                                                                              
Consolidated Statements of Changes in Stockholders' Equity                    
for the nine months ended March 31, 1999 and 1998....................         5
                                                                              
Consolidated Statements of Cash Flows                                         
for the nine months ended March 31, 1999 and 1998....................         6
                                                                              
Notes to Unaudited Consolidated Financial Statements.................         7
                                                                              
ITEM 2.  Management's Discussion and Analysis                                 
of Financial Condition and Results of Operations.....................        11
                                                                              
ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk..        23
                                                                              
                                                                              
PART II. OTHER INFORMATION                                                    
                                                                              
ITEM 1. Legal Proceedings............................................        24
                                                                              
ITEM 2. Changes in Securities and Use of Proceeds....................        24
                                                                              
ITEM 3. Defaults Upon Senior Securities..............................        24
                                                                              
ITEM 4. Submission of Matters to a Vote of Security Holders..........        24
                                                                              
ITEM 5. Other Information............................................        24
                                                                              
ITEM 6. Exhibits and Reports on Form 8-K.............................        24
                                                                              
Exhibit Index........................................................        26
                                                                              
Signature Page.......................................................        27
</TABLE>

================================================================================
Statements contained in this Form 10-Q which are not historical facts are
forward-looking statements, as that term is defined in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risk and uncertainties which could cause actual results to differ materially
from those projected. Such risks and uncertainties include potential changes in
interest rates, competitive factors in the financial services industry, general
economic conditions, the effect of new legislation and other risks detailed in
documents filed by the Company with the Securities and Exchange Commission from
time to time.
================================================================================
 

                                       2
<PAGE>
 
                RICHMOND COUNTY FINANCIAL CORP. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
              (In Thousands, Except Share and Per Share Amounts)
 
<TABLE>
<CAPTION>
                                                                                     March 31,              June 30,
                                                                                       1999                   1998
                                                                               -------------------      ---------------
                                                                                    (Unaudited)
                                   Assets
<S>                                                                            <C>                      <C>   
Cash and due from banks                                                                 $   52,895           $   31,884
Federal funds sold                                                                          88,050               26,000
Securities available for sale:
     Investment securities                                                                 303,438              238,890
     Mortgage-backed and mortgage-related securities                                       804,268              604,304
Loans receivable:
     Real estate loans                                                                   1,226,979              623,293
     Other loans                                                                            22,699               28,452
     Less allowance for loan losses                                                        (13,411)              (7,276)
                                                                                        ----------           ----------  
Total loans receivable, net                                                              1,236,267              644,469
Federal Home Loan Bank stock                                                                38,388               15,550
Banking premises and equipment, net                                                         26,257               13,094
Accrued interest receivable                                                                 16,674                9,827
Other real estate owned                                                                        772                  322
Net deferred tax assets                                                                     12,881                8,708
Goodwill                                                                                    44,097                    -
Other assets                                                                                14,655                2,796
                                                                                        ----------           ----------  
          Total assets                                                                  $2,638,642           $1,595,844
                                                                                        ==========           ==========
 
                         Liabilities and Stockholders' Equity
Demand deposits                                                                         $  201,634           $  121,646
Savings, N.O.W. & Money market accounts                                                    749,160              503,814
Certificates of deposit                                                                    612,097              325,348
                                                                                        ----------           ----------  
          Total deposits                                                                 1,562,891              950,808
Borrowings                                                                                 656,832              306,000
Accrued expenses & other liabilities                                                        25,666               10,441
                                                                                        ----------           ----------  
          Total liabilities                                                              2,245,389            1,267,249
 
                                 Stockholders' Equity
Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued                        -                    -
Common stock, $.01 par value, 75,000,000 shares authorized; 32,737,134 and
  26,423,550 shares issued and outstanding, as of March 31, 1999 and                                                    
  June 30, 1998, respectively                                                                  327                  264 
Additional paid-in-capital                                                                 330,767              254,307
Retained earnings-substantially restricted                                                 115,704              103,760
Unallocated common stock held by
     Employee Stock Ownership Plan ("ESOP")                                                (32,410)             (33,706)
Unearned compensation MRP Stock                                                            (17,701)                   -
Comprehensive income:
   Unrealized (loss) gain on securities available for sale, net of tax                      (3,434)               3,970
                                                                                        ----------           ----------  
          Total stockholders' equity                                                       393,253              328,595
                                                                                        ----------           ----------  
          Total liabilities and stockholders' equity                                    $2,638,642           $1,595,844
                                                                                        ==========           ==========
</TABLE> 

    See accompanying notes to unaudited consolidated financial statements.

                                       3
<PAGE>
 
                RICHMOND COUNTY FINANCIAL CORP. AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF OPERATIONS
              (In Thousands, Except Share and Per Share Amounts)
 
<TABLE> 
<CAPTION> 
                                                                For the                              For the 
                                                           Three Months Ended                    Nine Months Ended  
                                                               March 31,                             March 31,     
                                                       ----------------------------        ------------------------------          
                                                                 (Unaudited)                      (Unaudited)                      
                                                         1999             1998                  1999             1998              
                                                       ---------       ------------        ------------      ------------           
                                                                 
<S>                                                    <C>             <C>                  <C>              <C> 
Interest income:                                                 
   Loans                                                $ 17,638         $ 11,142              $47,399       $   32,249
   Debt and equity securities                              4,246            3,050               12,781            9,942
   Mortgage-backed and mortgage-related securities         8,844            6,487               26,923           14,827
   Federal funds sold and interest-earning bank                  
    balances                                                 260            3,296                  689            3,622         
                                                       ---------         --------              -------       ----------          
       Total interest income                              30,988           23,975               87,792           60,640
                                                       ---------         --------              -------       ----------             
                                                                         
Interest expense:                                                                                         
   Deposits                                                7,769            8,788               23,641           23,948
   Borrowed funds                                          6,654            1,385               17,012            2,175
                                                       ---------         --------              -------       ----------             
       Total interest expense                             14,423           10,173               40,653           26,123
                                                       ---------         --------              -------       ----------             
   Net interest income                                    16,565           13,802               47,139           34,517
   Provision for loan losses                                 600              600                1,950            1,500
                                                       ---------         --------              -------       ----------             
   Net interest income after provision for loan                          
    losses                                                15,965           13,202               45,189           33,017     
                                                       ---------         --------              -------       ----------          
                                                                                                          
Non-interest income:                                                     
   Fee income                                              1,332              956                3,355            2,600
   Net gain (loss) on sale of securities and loans            81              (53)               2,604               20
   Other                                                     100               34                  110               37
                                                       ---------         --------              -------       ----------             
       Total non-interest income                           1,513              937                6,069            2,657
                                                       ---------         --------              -------       ----------          
                                                                                                          
Non-interest expense:                                                                                     
   Salaries and employee benefits                          5,197            3,509               14,168            8,841
   Occupancy costs                                           985              867                2,616            2,320
   Computer service fees                                     959              672                2,599            2,054
   Advertising                                               354              237                1,195              829
   FDIC insurance premiums                                    54               38                  131              115
   Contribution to Richmond County Savings Foundation          -           19,558                    -           19,558
   Other                                                   1,063            1,557                3,178            3,071
                                                       ---------         --------              -------       ----------          
       Total general and administrative                    8,612           26,438               23,887           36,788
  Amortization of goodwill and other intangibles             195               78                  352              235
                                                       ---------         --------              -------       ----------          
       Total non-interest expense                          8,807           26,516               24,239           37,023
                                                       ---------         --------              -------       ----------          
                                                                                                          
   Income (loss) before income taxes                       8,671          (12,377)              27,019           (1,349)
   Provision (benefit) for income taxes                    3,291           (5,766)              10,265             (402) 
                                                       ---------         --------              -------       ----------          
                                                                                                          
Net income (loss)                                        $ 5,380         $ (6,611)             $16,754       $     (947) 
                                                       =========         ========              =======       ==========
Earnings (loss) per share:                                                                                
  (since Conversion for fiscal 1998)                                                                      
     Basic                                               $  0.24         $  (0.39)             $  0.72       $    (0.39)
     Diluted                                             $  0.24         $  (0.39)             $  0.72       $    (0.39) 
</TABLE> 
 
    See accompanying notes to unaudited consolidated financial statements.

                                       4
<PAGE>
 
                RICHMOND COUNTY FINANCIAL CORP. AND SUBSIDIARY
          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
              (In Thousands, Except Share and Per Share Amounts)

<TABLE>
<CAPTION>
                                                      Retained       Accumulated                       
                                      Additional     Earnings-          Other       Unallocated   Unallocated  Treasury       
                              Common   Paid-in-    Substantially    Comprehensive   Common Stock      MRP       Stock,        
                              Stock     Capital      Restricted         Income      Held By ESOP     Shares     At Cost     Total 
                              ------  ----------   -------------    -------------   ------------  -----------  --------    -------- 
<S>                           <C>     <C>          <C>              <C>             <C>           <C>          <C>        <C> 
Balance At June 30, 1998      $  264   $254,307       $103,760        $  3,970      $  (33,706)   $      -      $     -    $328,595 

Comprehensive income:                                                                                                    
 Net income                        -          -         16,754               -              -            -            -      16,754
 Other comprehensive income,                                                                                                       
  net of tax                       -          -              -               -               -           -            -           -
 Net unrealized loss on                                                                                                             
  certain securities, net          
   of tax                          -          -              -          (7,404)              -           -            -      (7,404)
                                                                                                                           --------
Comprehensive income                                                                                                          9,350
                                                                                                                           -------- 
Purchase of MRP shares             -          -              -               -               -     (16,118)           -     (16,118)
Allocation from shares                                                                                                              
 purchased with loan to ESOP       -        (67)             -               -           1,296           -            -       1,229
Amortization of MRP shares         -          -              -               -               -       1,237            -       1,237
Common stock repurchased                                                                                                            
 (3,474,106 shares)                -          -              -               -               -           -      (56,647)    (56,647)
Issuance of common stock                                                                                                            
 for Ironbound Bankcorp           14     25,851              -               -               -           -            -      25,865
Issuance of common stock                                                                                                            
 for Bayonne Bancshares           49     50,676              -               -               -      (2,820)      56,647     104,552
Cash dividends paid on                                                                        
 common stock                      -          -         (4,810)              -               -           -            -      (4,810)
                              ------   --------    -----------      ----------      ----------    --------     --------    -------- 
Balance At March 31, 1999     $  327   $330,767       $115,704        $(3,434)        $(32,410)   $(17,701)    $      -    $393,253
                              ------   --------    -----------      ----------      ----------    --------     --------    -------- 
 
Balance At June 30, 1997      $    -   $      -       $100,555        $    310        $      -    $      -     $      -    $100,865
 
Comprehensive income:
 Net loss                          -          -           (947)              -               -           -            -        (947)
 Net unrealized gain on                                                                       
  certain securities, net                                                                     
   of tax                          -          -              -           2,416               -           -            -       2,416
                                                                                                                           -------- 
Comprehensive income                                                                                                          1,469
                                                                                                                           --------
Issuance of 24,466,250                                                                                                              
 shares of $.01 par value                                                                     
 common stock                    245          -              -               -               -           -            -         245
Issuance of 1,957,300                                                                         
 shares of $.01 par value                                                                     
 common stock to the RC                                                                       
 Savings Foundation               19          -              -               -               -           -            -          19
Issuance of 24,466,250                                                                        
 shares of common stock                                                                       
 in initial public                 
 offering at $10.00 per                                                                       
 share, net of conversion                                                                     
 related expenses                  -    234,644              -               -               -           -            -     234,644
Issuance of 1,957,300                                                                         
 shares of common stock                                                                       
 at $10.00 per share to            
 the RC Savings Foundation         -     19,553              -               -               -           -            -      19,553 
Open market purchase of
 the Company's common stock            
 by ESOP trustee                   -          -              -               -         (34,571)          -            -     (34,571)
Allocation from shares             
 purchased with loan to                                                                                  
 ESOP                              -         25              -               -             433           -            -         458
 
                              ------   --------    -----------      ----------      ----------    --------     --------    -------- 
Balance At March 31, 1998     $  264   $254,222       $ 99,608        $  2,726        $(34,138)   $      -     $      -    $322,682
                              ------   --------    -----------      ----------      ----------    --------     --------    -------- 
</TABLE> 

    See accompanying notes to unaudited consolidated financial statements.

                                       5
<PAGE>
 
                RICHMOND COUNTY FINANCIAL CORP. AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In Thousands)

<TABLE>
<CAPTION>
                                                                                             For the
                                                                                        Nine Months Ended
                                                                                             March 31,
                                                                                 --------------------------------
                                                                                            (Unaudited)
                                                                                      1999              1998
                                                                                 -------------      ------------- 
<S>                                                                              <C>                <C>  
Net cash provided by operating activities                                            $  15,288          $  12,687

Cash flows from investing activities:                                        
  Increase in loans receivable, net                                                   (357,457)           (44,230)
  Loans purchased                                                                       (1,500)           (21,907)
  Loans sold                                                                            15,300                  -
  Investment securities held to maturity:                                    
    Maturities and redemptions                                                               -             61,193
  Investment securities available for sale:                                  
    Sales and redemptions                                                               72,771             53,995
    Purchases                                                                          (67,816)          (132,701)
  Mortgage-backed and mortgage-related securities held to maturity:          
    Maturities                                                                               -             43,556
    Principal collected                                                                      -             31,987
  Mortgage-backed and mortgage-related securities available for sale:        
    Calls and redemptions                                                               34,726             90,976
    Principal collected                                                                199,663             30,524
    Purchases                                                                         (202,888)          (535,598)
  Purchases of Federal Home Loan Bank of New York stock                                (11,990)           (10,000)
  Net addition to banking premises and equipment                                        (3,559)            (1,123)
  Proceed from sales of other real estate owned                                            134                571
  Cash and cash equivalents acquired in Ironbound Bankcorp acquisition, net             40,434                  -
  Cash and cash equivalents acquired in Bayonne Bancshares acquisition, net            124,413                  -
                                                                                     ---------          ---------      
       Net cash used in investing activities                                          (157,769)          (432,757)
 Cash flows from financing activities:                                       
  Net increase in deposits                                                              84,117             45,383
  Increase in borrowings from the Federal Home Loan Bank                               219,000            200,000
  Net proceeds of common stock issuance                                                      -            234,908
  Loan to ESOP for open market purchases of common stock                                     -            (34,571)
  Cash dividends paid on common stock                                                   (4,810)                 -
  Purchase of MRP - 1998 shares                                                        (16,118)                 -
  Purchase of treasury shares                                                          (56,647)                 -
                                                                                     ---------          ---------      
       Net cash provided by financing activities                                       225,542            445,720
                                                                                     ---------          ---------      
                                                                             
  Net increase in cash and cash equivalents                                             83,061             25,650
  Cash and cash equivalents at beginning of period                                      57,884             32,543
                                                                                     ---------          ---------      
  Cash and cash equivalents at end of period                                         $ 140,945          $  58,193
                                                                                     =========          =========      
                                                                             
Supplemental disclosure of cash flow information:                            
Cash paid during the year for:                                               
  Interest on deposits and borrowed funds                                            $  39,058          $  25,044
  Income taxes                                                                           8,125              4,294
Non-cash investing activities:                                               
  Additions to other real estate owned, net                                          $      90          $     611
  Securitization of mortgage loans                                                      78,495                  -
  Net (decrease) increase in unrealized gains on available for sale securities         (12,824)             4,058
</TABLE>

    See accompanying notes to unaudited consolidated financial statements.

                                       6
<PAGE>
 
                RICHMOND COUNTY FINANCIAL CORP. AND SUBSIDIARY
             NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                        

1. Basis of Presentation
   ---------------------

The accompanying unaudited consolidated financial statements include the
accounts of Richmond County Financial Corp. (the "Company"), its direct wholly-
owned subsidiary, Richmond County Savings Bank (the "Bank"), and the
subsidiaries of the Bank.

The unaudited consolidated financial statements included herein reflect all
normal recurring adjustments which are, in the opinion of management, necessary
for a fair presentation of the results for the interim periods presented. The
results of operations for the three and nine months ended March 31, 1999 are not
necessarily indicative of the results of operations that may be expected for the
entire fiscal year. Certain information and note disclosures normally included
in the financial statements, prepared in accordance with generally accepted
accounting principles, have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. The unaudited
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included in the Company's
1998 Annual Report on Form 10-K.

2. Earnings Per Share
   ------------------

Basic earnings per common share is calculated by dividing net income by the
weighted average number of shares of common stock outstanding. Diluted earnings
per common share is calculated using the same method as basic earnings per
common share, but reflects the potential dilution of common stock equivalents.
In accordance with the provisions of the American Institute of Certified Public
Accountants ("AICPA") Statement of Position 93-6, "Employers Accounting for
Employee Stock Option Plans", ESOP shares that have not been allocated to
participants' accounts or are not committed to be released for allocation, are
not considered outstanding for the earnings per share calculations. Basic and
diluted weighted average common shares outstanding were 22,515,575 and
22,357,633 shares, respectively, for the third quarter of fiscal 1999. For the
nine months ended March 31, 1999, basic and diluted weighted average common
shares outstanding were 23,431,027 and 23,238,784 shares, respectively.

3. Conversion to Stock Form of Ownership
   -------------------------------------

On July 31, 1997, the Board of Trustees of the Bank unanimously adopted a Plan
of Conversion whereby the Bank would convert from a New York State chartered
mutual bank to a New York State-chartered stock institution with the concurrent
formation of a holding company, Richmond County Financial Corp. (the
"Conversion").

The Conversion was completed on February 18, 1998, with the issuance by the
Company of 24,466,250 shares of common stock, at a price of $10.00 per share, in
an initial public offering. The Company received gross proceeds from the
Conversion of $244.7 million, before the reduction from gross proceeds of $9.8
million for estimated conversion related expenses. The Company used $117.4
million, or 50% of the net proceeds, to purchase all of the outstanding stock of
the Bank.

                                       7
<PAGE>
 
Concurrent with the completion of the Conversion, an additional 1,957,300 shares
of authorized but unissued shares of common stock were contributed by the
Company to the Richmond County Savings Foundation (the "Foundation"), a private
foundation dedicated to charitable purposes within the Bank's communities that
it serves. The Company recorded a one-time charge of $19.6 million, the full
amount of the contribution made to the Foundation and a corresponding deferred
tax benefit of $8.4 million, in the third quarter ended March 31,1998. The
contribution to the Foundation will be fully tax deductible, subject to an
annual limitation based upon the Company's annual taxable income.

4. Employee Stock Ownership Plan
   -----------------------------

In connection with the Conversion, the Bank implemented the ESOP, a tax-
qualified plan designed to invest primarily in the Company's common stock. The
ESOP will provide eligible employees with the opportunity to receive a Bank-
funded retirement benefit based primarily on the value of the Company's common
stock. All eligible employees of the Bank and its affiliates, including the
Company, as of the effective date of the Conversion, may participate in the
ESOP. Subsequent to the Conversion, all eligible employees of the Bank and its
affiliates, including the Company, may participate in the ESOP upon the age of
21 and the completion of one year of service. Subsequent to the Conversion, the
ESOP purchased, through a $34.6 million loan from the Company, 8%, or 2,113,884
shares of common stock in the open market. The term of the ESOP loan will be 20
years and will be primarily repaid with contributions from the Bank to the ESOP.
The Company recognizes compensation expense attributable to its ESOP over the
year based upon the estimated number of ESOP shares to be allocated each
December 31st. The amount of compensation expense recorded is equal to the
estimated number of shares to be allocated by the ESOP multiplied by the average
fair value of the underlying shares during the period. For the three and nine
months ended March 31, 1999, compensation expense attributable to the ESOP was
$414,000 and $1.2 million, respectively.

5. Stock-Based Incentive Plans
   ---------------------------

At the annual meeting of the shareholders held on September 29, 1998, the
shareholders approved the 1998 Stock-Based Incentive Plan ("Incentive Plan")
authorizing the granting of options to purchase common stock of the Company
("Options") and awards of shares of common stock ("Stock Awards") and certain
related rights (collectively referred to as "Awards"). Subject to certain
adjustments to prevent dilution of Awards to participants, the maximum number of
shares reserved for Awards under the Incentive Plan is 3,699,297 shares,
consisting of 2,642,355 shares reserved for Options, which will primarily vest
over a five year period and which must be exercised no more than 10 years from
the date of grant and 1,056,942 shares reserved for Stock Awards, which will
primarily vest over a five year period. All employees and outside Directors of
the Company and its affiliates, including the Bank, are eligible to receive
Awards under the Incentive Plan. The Incentive Plan is administered by a
committee (the "Committee") consisting of members of the Company who are not
employees of the Company or its affiliates.

The Company contributed $16.1 million, during the second quarter of fiscal 1999,
to the Incentive Plan to enable the Incentive Plan to purchase 1,056,942 shares
of the Company's common stock to be awarded. This contribution represents
deferred compensation which is initially recorded as a reduction to
stockholders' equity and ratably charged to compensation expense over the
vesting period of the awards. The Committee established October 20, 1998 as the
Incentive Plan's effective grant date and 1,053,554 shares were awarded to
outside directors and employees of the 

                                       8
<PAGE>
 
Company, at the fair value of $14.25 per share on the date of grant. For the
nine month period ended March 31, 1999, compensation expense attributable to the
Incentive Plan was approximately $1.2 million.

Options granted under the Incentive Plan are either non-statutory stock options
or incentive stock options. 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 on the date of grant. On October 20, 1998, the Committee issued
options of 2,602,385 shares, at the fair value of $14.25 per share on the date
of grant. The granting of these options did not affect the Company's
consolidated results of operations for the nine months ended March 31, 1999 or
the Company's consolidated statement of financial condition at March 31, 1999.

6. Comprehensive Income
   --------------------

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income"
("SFAS No. 130"). SFAS No. 130 establishes standards for reporting and display
of comprehensive income and its components (revenues, expenses, gains, and
losses) in a full set of general-purpose financial statements. SFAS No. 130
requires that all items that are required to be recognized under accounting
standards as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. SFAS No. 130 requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement and (b) display
the accumulated balance of other comprehensive income separately from net worth
and additional paid-in capital in the equity section of a statement of financial
condition. The Company adopted SFAS No. 130 in the first quarter of fiscal 1999.
All comparative financial statements provided for earlier periods have been
restated to reflect application of the provisions. As the requirements of SFAS
No. 130 are solely disclosure related, its implementation had no affect on the
Company's consolidated financial condition or results of operations.

7. Acquisitions
   ------------

Acquisition of Bayonne Bancshares, Inc.

At the close of business on March 22, 1999, the Company completed its
acquisition of Bayonne Bancshares, Inc. ("Bayonne"), the holding company of
First Savings Bank of New Jersey, SLA, a New Jersey State chartered savings and
loan association with four full service banking offices located in Bayonne, New
Jersey in a transaction which was accounted for as a purchase. The cost of the
acquisition was approximately $118.5 million of which the Company issued 1.05
shares of its common stock for each outstanding share of Bayonne common stock
for a total of 8,668,615 common shares of which 3,938,731 shares were issued
from its treasury shares. Options to purchase 683,577 shares of Bayonne common
stock were also converted into the right to purchase 717,755 shares of Richmond
County common stock. The excess of cost over the fair value of net assets
acquired ("goodwill") in the transaction was $28.8 million which is being
amortized on a straight line basis over 15 years.

Acquisition of Ironbound Bankcorp, NJ.

At the close of business on March 5, 1999, the Company completed its acquisition
of Ironbound Bankcorp, NJ ("Ironbound"), the holding company of Ironbound Bank,
a New Jersey chartered 

                                       9
<PAGE>
 
commercial bank with three full service commercial banking offices located in
the New Jersey counties of Union and Essex in a transaction which was accounted
for as a purchase. The cost of the acquisition was approximately $27.7 million.
The Company issued 1.463 shares of its common stock for each outstanding share
of Ironbound common stock for a total of 1,458,842 common shares. The excess of
cost over the fair value of net assets acquired in the transaction ("goodwill")
was $15.3 million which is being amortized on a straight line basis over 15
years.

8. Recent Developments
   -------------------

On April 22, 1999, the Company announced that its Board of Directors declared a
quarterly cash dividend of nine cents ($0.09) per common share. The dividend is
payable on May 25, 1999 to shareholders of record as of May 10, 1999.

                                       10
<PAGE>
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

General

Richmond County Financial Corp. is a savings and loan holding company regulated
by the Office of Thrift Supervision. The primary operating subsidiary of
Richmond County Financial Corp. is Richmond County Savings Bank (the "Bank"), a
New York State chartered stock savings bank. While the following discussion of
financial condition and results of operations includes the collective results of
Richmond County Financial Corp. and the Bank (collectively the "Company"), this
discussion reflects principally the Bank's activities as the Company currently
does not engage in any significant business activities other than the management
of the Bank and the investment of net proceeds from the Bank's mutual to stock
conversion, which occurred on February 18, 1998 (the "Conversion").

Acquisition of Bayonne Bancshares, Inc.

At the close of business on March 22, 1999, the Company completed its
acquisition of Bayonne Bancshares, Inc. ("Bayonne"), the holding company of
First Savings Bank of New Jersey SLA, a New Jersey State chartered savings and
loan association with four full service banking offices located in Bayonne, New
Jersey, in a transaction which was accounted for as a purchase. The cost of the
acquisition was approximately $118.5 million. The Company issued 1.05 shares of
its common stock for each outstanding share of Bayonne common stock for a total
of 8,668,615 common shares of which 3,938,731 shares were issued from its
treasury shares. Options to purchase 683,577 shares of Bayonne common stock were
also converted into the right to purchase 717,755 shares of Richmond County
common stock. The excess of cost over the fair value of net assets acquired
("goodwill") in the transaction was $28.8 million, which is being amortized on a
straight line basis over 15 years.

Acquisition of Ironbound Bankcorp, NJ.

At the close of business on March 5, 1999, the Company completed its acquisition
of Ironbound Bankcorp, NJ ("Ironbound"), the holding company of Ironbound Bank,
a New Jersey chartered commercial bank with three full service commercial
banking offices located in the New Jersey counties of Union and Essex, in a
transaction which was accounted for as a purchase. The cost of the acquisition
was approximately $27.7 million of which the Company issued 1.463 shares of its
common stock for each outstanding share of Ironbound common stock for a total of
1,458,842 common shares. The goodwill in the transaction was $15.3 million,
which is being amortized on a straight line basis over 15 years.

Financial Condition

Total assets increased by $1.0 billion, or 65.3%, from $1.6 billion at June 30,
1998 to $2.6 billion at March 31, 1999. The increase in overall assets was
primarily due to the completion of the Bayonne and Ironbound acquisitions with
and into the Bank. As of the acquisition dates, Bayonne and Ironbound had total
assets of approximately $650.2 million and $115.2 million, total deposits of
$426.6 million and $102.3 million and total equity of $83.1 million and $12.4
million, respectively. In addition to the asset growth via acquisitions, the
Bank experienced an overall increase in net loans of $264.0 million, or 40.1%.
The increase in loan growth, exclusive of funding sources 

                                       11
<PAGE>
 
received from the two closed acquisitions, were primarily funded by an increase
of $219.0 million in advances received from the Federal Home Loan Bank ("FHLB")
and a net increase in overall deposits of $84.1 million.

Mortgage-backed and mortgage-related securities increased by $200.0 million, or
33.1%, from $604.3 million at June 30, 1998 to $804.3 million at March 31, 1999.
The increase in mortgage-backed and mortgage-related securities was primarily
the result of $152.8 million of mortgage-backed and mortgage-related securities
acquired through the Bayonne and Ironbound acquisitions and the completion of a
$78.5 million loan securitization. During the third quarter of fiscal 1999, the
Bank securitized approximately $78.5 million of originated 30-year fixed rate
one- to four- family mortgage loans in exchange for a like amount of FHLMC pass-
through securities, retaining the securities and the related servicing rights.

Investment securities at March 31, 1999 totaled $303.4 million, an increase of
$64.5 million, or 27.0%, compared to $238.9 million at June 30, 1998. The
increase in investment securities was primarily the result of $84.2 million of
investment securities acquired through the Bayonne and Ironbound acquisitions.

The Bank continues to experience increased loan growth, and for the nine months
ended March 31, 1999, exclusive of the two recently completed acquisitions,
gross loans receivable increased by $344.2 million, or 52.8% on an non-
annualized basis, to $917.5 million, compared to $651.7 million at June 30,
1998. The substantial increase in gross loans was due primarily to originations
of $430.3 million generated during the nine months ended March 31, 1999, offset
by the securitization of $78.5 million of one- to four- family fixed rate
mortgage loans, amortization and prepayments of $73.5 million and the sale of
$12.3 million of student loans. Loan originations for the nine month period
ended March 31, 1999 were primarily comprised of multifamily and one- to four-
family mortgage loans. Multifamily mortgage loan originations for the nine
months ended March 31, 1999 totaled $184.1 million, bringing the total
multifamily loan portfolio to $238.7 million, or 19.1% of gross loans at March
31, 1999. Total one- to four- family loan production for the nine months ended
March 31, 1999 was $200.3 million.

Total liabilities at March 31, 1999 were $2.2 billion, an increase of $978.1
million, or 77.2%, from $1.3 billion at June 30, 1998. Total deposits increased
by $612.1 million, or 64.4%, from $950.8 million at June 30, 1998 to $1.6
billion at March 31, 1999. The Bank's "core" deposits increased by $325.3
million, or 52.0%, at March 31, 1999 to $950.8 million, from $625.5 million at
June 30, 1998. The increase in the Bank's "core" deposits was primarily
attributable to a $245.3 million increase in savings, N.O.W. & Money market
accounts and an $80.0 million increase in demand deposits. The Bank also
experienced an increase of $286.7 million, or 88.1%, in certificates of deposit
from $325.3 million at June 30, 1998 to $612.1 million at March 31, 1999. The
increase in overall deposits were primarily the result of $528.9 million of
deposits acquired through the Bayonne and Ironbound acquisitions, the opening of
two full-service banking facilities on Staten Island and an increase in
certificates of deposit which was primarily attributable to increased marketing
of such deposit products.

Additionally, the Bank continues to place a greater level of emphasis on the
utilization of borrowed funds to fund asset growth. Moreover, borrowed funds
increased $131.8 million as a result of the Bayonne acquisition. In this regard,
at March 31, 1999, the Bank had total borrowings of $656.8 million, of which
$640 million were in the form of advances from the FHLB and $16.8 million were
in the form of reverse repurchase agreements. The Bank had borrowings of $306.0
million at June 30,

                                       12
<PAGE>
 
1998. The Bank may increase its levels of borrowed funds, which may result in an
increase in the Bank's overall cost of funds. The Bank's current strategy is to
invest such borrowed funds primarily in mortgage-backed and mortgage-related
securities. This strategy is intended to incrementally increase net interest
income, although it may have the effect of incrementally decreasing net interest
rate spread.

Total stockholders' equity increased by $64.7 million to $393.3 million at March
31, 1999 from $328.6 million at June 30, 1998. The overall increase was
primarily due to the stock purchase acquisitions of Bayonne and Ironbound,
whereas the company issued 8,668,615 shares and 1,458,842 shares, respectively,
of which 3,938,731 shares were reissued from the Company's treasury. In
addition, stockholders' equity was further increased by the earnings reported
for the nine months ended March 31, 1999 of $16.8 million and the amortization
of unallocated and unearned shares of common stock held by the Company's stock-
related benefit plans. These increases were partially offset by $17.7 million as
a result of the issuance of grants under the recently adopted Management
Recognition and Retention Plans ("MRP"), year to date cash dividends paid of
$4.8 million and a $7.4 million decrease in net unrealized gain on securities
available-for-sale, net of tax.

Non-performing Assets

Non-performing loans totaled $6.7 million, or 0.6% of total loans at March 31,
1999, as compared to $5.5 million, or 0.9% of total loans, at June 30, 1998. At
March 31, 1999, the Bank's real estate owned net, consisted of foreclosed assets
totaling $772,000, which at such date was comprised of seven one- to four- 
family properties and one vacant commercial lot.

At March 31, 1999, the Bank had $2.0 million of assets designated as
"Substandard", consisting of 14 loans, no assets classified as "Doubtful", and
no assets classified as "Loss", respectively. At March 31, 1999, the Bank had
$4.6 million of assets designated "Special Mention", consisting of 49 loans,
which were designated "Special Mention" due to past loan delinquencies.

Non-accrual loans totaled $6.7 million as of March 31, 1999, which primarily
included 48 one- to four-family loans, with an aggregate balance of $4.7
million, 4 non-residential loans totaling $1.4 million of which one loan is a
$1.1 million commercial mortgage on a mixed-use property in Staten Island, New
York and 26 other loans totaling $600,000. The commercial mortgage loan is
secured by the property and was last appraised in December 1996 for $1.4
million.

For the nine months ended March 31, 1999, the Company's loan loss provision was
$2.0 million as compared to $1.5 million for the prior year's period. The
Company's allowance for loan losses totaled $13.4 million at March 31, 1999 and
$7.3 million at June 30, 1998, which represents a ratio of allowance for loan
losses to non-performing loans and to total loans of 199.0% and 1.1%,
respectively, and 134.6% and 1.1%, respectively. The Company continues to
increase its overall loan loss reserves after analyzing non-performing loans as
well as the need to increase its general valuation allowances due to the
increase in lending of all loan products. Management believes the allowance for
loan losses at March 31, 1999 is adequate and sufficient reserves are presently
maintained to cover potential losses. For the quarter and nine months ended
March 31, 1999, the Company experienced net charge-offs of $30,000 and $140,000,
respectively.

                                       13
<PAGE>
 
Comparison of Operating Results for the Three Months Ended March 31, 1999 and
1998

General.

The Company reported net income of $5.4 million, or diluted earnings per share
of $0.24 for the third quarter ended March 31, 1999, an increase of $12.0
million from the $(6.6) million net loss reported for the same period last year,
a period in which the Bank converted to a stock institution. Core earnings for
the quarter ended March 31, 1999 increased 17.4% to a record $5.4 million, or
core diluted earnings per share of $0.24, compared to $4.6 million reported in
the third quarter of fiscal 1998.

Core earnings excludes the impact of a non-recurring contribution relating to
the funding of the Foundation for the three months ended March 31, 1998 of $19.6
million ($11.2 million after tax) and net gains on sales of securities and loans
of $81,000 for the quarter ended March 31, 1999. Net loss per share since the
conversion to a public company on February 18, 1998 (the "Conversion") to March
31, 1998 was $0.39.

The Foundation was established and funded as part of the Conversion to a New
York State chartered stock savings bank. At the close of the Conversion, the
Company funded the Foundation with a contribution of 1,957,300 shares of common
stock resulting in a one-time, non-recurring charge of $19.6 million ($11.2
million after tax). The Foundation is dedicated to charitable purposes in the
communities served by the Bank.

Interest Income. The Company reported total interest income of $31.0 million for
the quarter ended March 31, 1999, representing an increase of $7.0 million, or
29.2%, as compared to the same period in 1998. The increase in interest income
was primarily attributable to the growth in average interest-earning assets of
$426.5 million, offset in part, by a 2 basis point decrease in the average yield
on interest-earning assets. The overall increase in the level of interest-
earning assets was primarily the result of utilizing the net conversion proceeds
and an increase in borrowed funds to fund growth in the mortgage loan and
securities portfolios.

Interest income on loans increased $6.5 million, or 58.3%, to $17.6 million for
the three month period ended March 31, 1999, as compared to the $11.1 million
reported for the comparable period in 1998. This increase was the result of
growth in the average balance of real estate loans outstanding primarily due to
increased originations of multifamily, one- to four- family real estate loans 
and commercial real estate loans. The average yield on the overall loan
portfolio decreased 55 basis points from 8.15% for the three months ended March
31, 1998, to 7.60% for the same period in 1999.

Interest income on debt and equity securities increased $1.2 million, or 39.2%,
from $3.1 million for the three months ended March 31, 1998, to $4.2 million for
the same period in 1999.

Interest income on mortgage-backed and mortgage-related securities increased
$2.4 million, or 36.3%, from $6.5 million for the three month period ended March
31, 1998, to $8.8 million for the three month period ended March 31, 1999. This
increase was primarily due to an increase in the average balance of mortgage-
backed and mortgage-related securities of $200.7 million, resulting from the
restructuring of the securities portfolio, the investment of net conversion
proceeds and the investment of borrowed funds. The increase in such securities
reflects management's recent 

                                       14
<PAGE>
 
revision to its securities investment strategy, whereby it has decreased its
emphasis on debt securities by investing funds from the maturity and sale of
debt securities into mortgage-backed and mortgage-related securities. The yield
on the mortgage-backed and mortgage-related securities decreased by 46 basis
points, due primarily to the lower rate environment for new purchases and the
repricing of adjustable rate securities purchased in prior periods.

Interest Expense. Interest expense increased $4.3 million, or 41.8%, from $10.2
million for the three month period ended March 31, 1998, to $14.4 million for
the three month period ended March 31, 1999. Interest expense on deposits
decreased $1.0 million, or 11.6%, from $8.8 million for the three month period
ended March 31, 1998, to $7.8 million for the three month period ended March 31,
1999. The decrease is a result of a 24 basis point reduction in the average cost
of deposits, offset in part by a $43.0 million increase in the average balance
of interest-bearing deposits, primarily attributable to a $51.4 million increase
in the average balance of certificates of deposit and a $12.9 million decrease
in the average balance of savings deposit accounts. The increase in overall
deposits can mainly be attributable to the Bank's strategy of attracting more
certificates of deposit through additional certificate of deposit products, the
related marketing of commercial deposit accounts and the opening of two full-
service banking facilities in Staten Island during the third quarter of fiscal
1999.

Interest expense on borrowed funds was $6.7 million and $1.4 million for the
quarter ended March 31, 1999 and 1998, respectively. The Bank continues to place
a greater level of emphasis on the utilization of borrowed funds to fund asset
growth and to leverage the Bank's capital position to improve returns on equity.
The Bank may increase its levels of borrowed funds, which may result in an
increase in the Bank's overall cost of funds. The Bank's current strategy is to
invest such borrowed funds primarily in mortgage-backed and mortgage-related
securities. This strategy is intended to incrementally increase net interest
income, although it may have the effect of incrementally decreasing net interest
rate spread. Consequently, the average cost of the Bank's interest-bearing
liabilities increased from 3.91% for the three month period ended March 31,
1998, to 4.11% for the three month period ended March 31, 1999.

Provision for Loan Losses. The Bank's provision for loan losses was $600,000 for
the three month periods ended March 31, 1999 and 1998. The third quarter fiscal
1999 provision was based on management's evaluation of its loan portfolio and
real estate market conditions. In particular, management considered the
continued growth in the portfolio, as well as the overall level of non-
performing loans. Management believes, based upon information currently
available, that its allowance for loan losses is adequate to cover potential
loan losses. To the extent the Bank increases its investment in multifamily
loans, commercial real estate, commercial and other loans, which entail higher
risk than one- to four- family loans, the Bank may decide to increase its
allowance for loan losses through additional loan loss provisions, which may
adversely affect net income. In addition, if general economic conditions and
real estate values within the Bank's primary lending area decline, the level of
non-performing loans may increase, resulting in larger provisions for loan
losses which, in turn, would also adversely affect net income.

Non-Interest Income. Exclusive of net gains and losses from the sales of
securities and loans, non-interest income for the three month period ended March
31, 1999, increased $442,000, or 44.6%, to $1.4 million from $990,000 for the
same period in 1998. The increased level of non-interest income is primarily due
to an overall increase in deposit fee income. In particular, during the second
quarter of fiscal 1999, the Bank instituted a charge to non-Bank customers (i.e.
foreign customers), for the use of the Bank's ATM facilities.

                                       15
<PAGE>
 
Non-Interest Expense. Non-interest expense, excluding the charitable
contribution recognized in fiscal 1998, for the third quarter of fiscal 1999
increased $1.7 million, or 25.2%, as compared to $6.9 million reported for the
same period of fiscal 1998. The increase in non-interest expense was primarily
due to increases in compensation and employee benefits, including senior
management additions, compensation costs associated with the establishment of
the Bank's new Multifamily Lending Department and the addition of the ESOP
and the MRP. In addition, the Bank expects non-interest expense to increase in
future periods as a result of the Bank's opening of a public accommodation
office and the opening of two new full-service branches in Staten Island during
the third quarter of fiscal 1999 and the expected opening of a full-service
branch in Union, New Jersey.

Income taxes. The Company's effective consolidated tax rate for the three month
period ended March 31, 1999 was 37.9% as compared to (46.6)% reported for the
comparable period last year. The three month period ended March 31, 1998 rate
includes the effect of funding the Foundation. Excluding the effect of the
Foundation, the Company's effective tax rate was 40.5%. The reduction of the
Company's effective tax rate is primarily due to the Bank's utilization of
various tax-planning strategies. The contribution to the Foundation is tax
deductible, subject to an annual limitation based on 10% of the Company's annual
taxable income. The Company, however, will be able to carry forward any unused
portion of the deduction for five years following the contribution. The Company
recognized a $19.6 million expense for the full amount of the contribution to
the Foundation, offset in part by the $8.4 million corresponding tax benefit,
during the three month period ended March 31, 1998

Comparison of Operating Results for the Nine Months Ended March 31, 1999 and
1998

General

The Company reported net income of $16.8 million, or diluted earnings per share
of $0.72 for the nine month period ended March 31, 1999, an increase of $17.7
million as compared to the $(947,000) loss reported for the same period last
year. Core earnings for the nine months ended March 31, 1999 increased 47.3% to
$15.1 million, or core diluted earnings per share of $0.65, as compared to $10.3
million reported for the comparable nine month period in the prior year. Core
earnings excludes the impact of a non-recurring contribution relating to the
funding of Foundation for the nine months ended March 31, 1998 of $19.6 million
($11.2 million after tax) and net gains on sales of securities and loans of 
$2.6 million for the nine month periods ended March 31, 1999, respectively. Net
loss per share since the Conversion to a public company on February 18, 1998 to
March 31, 1998 was $0.39.

The Foundation was established and funded as part of the Conversion to a New
York State chartered stock savings bank. At the close of the Conversion, the
Company funded the Foundation with a contribution of 1,957,300 shares of common
stock resulting in a one-time, non-recurring charge of $19.6 million ($11.2
million after tax). The Foundation is dedicated to charitable purposes in the
communities served by the Bank.

Interest Income. The Company reported total interest income of $87.8 million for
the nine months ended March 31, 1999, representing an increase of $27.2 million,
or 44.8%, as compared to the same period in 1998. The increase in interest
income was primarily attributable to the growth in average interest-earning
assets of $560.0 million, offset in part by a 28 basis point decrease in the

                                       16
<PAGE>
 
average yield on interest-earning assets. The overall increase in the level of
interest-earning assets was primarily the result of utilizing the net conversion
proceeds and an increase in borrowed funds to fund growth in the mortgage loan
and securities portfolios.

Interest income on loans increased $15.2 million, or 47.0%, to $47.4 million for
the nine months ended March 31, 1999, as compared to the $32.2 million reported
for the comparable period in 1998. This increase was the result of growth in the
average balance of real estate loans outstanding, primarily due to increased
originations of multifamily loans, one- to four- family and commercial real
estate loans. The average yield on the overall loan portfolio decreased to 7.58%
from 8.07% for the nine months ended March 31, 1999 and 1998, respectively.

Interest income on debt and equity securities increased $2.8 million, or 28.6%,
from $9.9 million for the nine months ended March 31, 1998 to $12.8 million for
the same period in 1999.

Interest income on mortgage-backed and mortgage-related securities increased
$12.1 million, or 81.6%, from $14.8 million for the nine month period ended
March 31, 1998, to $26.9 million for the nine month period ended March 31, 1999.
This increase was primarily due to an increase in the average balance of
mortgage-backed and mortgage-related securities of $284.0 million, resulting
from the restructuring of the securities portfolio, the investment of net
conversion proceeds and the investment of borrowed funds. The increase in such
securities reflects management's recent revision to its securities investment
strategy, whereby it has decreased its emphasis on debt securities by investing
funds from the maturity and sale of debt securities into mortgage-backed and
mortgage-related securities. The yield on the mortgage-backed and mortgage-
related securities decreased by 56 basis points due to the lower rate
environment for new purchases and the repricing of adjustable rate securities
purchased in prior periods.

Interest Expense. Interest expense increased $14.5 million, or 55.6%, from $26.1
million for the nine month period ended March 31, 1998, to $40.7 million for the
nine month period ended March 31, 1999. Interest expense on deposits decreased
$307,000, or 1.3%, from $23.9 million for the nine month period ended March 31,
1998, to $23.6 million for the nine month period ended March 31, 1999. The
decrease is a result of an 11 basis point reduction in the average cost of
deposits, offset in part by a $44.5 million increase in the average balance of
interest-bearing deposits, primarily attributable to a $36.0 million increase in
the average balance of certificates of deposits. The increase in overall
deposits can mainly be attributable to the Bank's strategy of attracting more
certificates of deposit through additional certificate of deposit products, the
related marketing of commercial deposit accounts and the opening of two full-
service banking facilities in Staten Island during the third quarter of fiscal
1999 and the expected opening of a full-service branch in Union, New Jersey.

Interest expense on borrowed funds was $17.0 million and $2.2 million for the
nine month period ended March 31, 1999 and 1998, respectively. The Bank
continues to place a greater level of emphasis on the utilization of borrowed
funds to fund asset growth and to leverage the Bank's capital position to
improve returns on equity. The Bank may increase its utilization of borrowed
funds, which may result in an increase in the Bank's overall cost of funds. The
Bank's current strategy is to invest such borrowed funds primarily in mortgage-
backed and mortgage-related securities. This strategy is intended to
incrementally increase net interest income, although it may have the effect of
incrementally decreasing net interest rate spread. Consequently, the average
cost of the Bank's interest-bearing liabilities increased from 3.86% for the
nine month period ended March 31, 1998 to 4.20% for the nine month period ended
March 31, 1999.

                                       17
<PAGE>
 
Provision for Loan Losses.  The Bank's provision for loan losses was $2.0
million for the nine month period ended March 31, 1999, as compared to $1.5
million for the nine month period ended March 31, 1998.  The provision for the
nine month period ended March 31, 1999, was based on management's evaluation of
its loan portfolio and real estate market conditions.  In particular, management
considered the continued growth in the portfolio, as well as the overall level
of non-performing loans. Management believes, based upon information currently
available, that its allowance for loan losses is adequate to cover future loan
losses.  To the extent the Bank increases its investment in multifamily loans,
commercial real estate, commercial and other loans, which entail higher risk
than one- to four-family loans, the Bank may decide to increase its allowance
for loan losses through additional loan loss provisions, which may adversely
affect net income. In addition, if general economic conditions and real estate
values within the Bank's primary lending area decline, the level of non-
performing loans may increase, resulting in larger provisions for loan losses
which, in turn, would also adversely affect net income.

Non-Interest Income. Exclusive of net gains and losses from the sales of
securities and loans, non-interest income for the nine month period ended March
31, 1999, increased $828,000, or 31.4%, to $3.5 million from $2.6 million for
the same period in 1998. The increased level of non-interest income is primarily
due to an overall increase in deposit fee income.  In particular, during the
second quarter of fiscal 1999, the Bank instituted a charge to non-Bank
customers (i.e. foreign customers), for the use of the Bank's ATM facilities.
Net gains reported for the nine month period ended March 31, 1999 were primarily
due to net gains of $2.2 million from the sale of equity and investment
securities, and $444,000 of net gains realized from the sale of the Bank's
student loan portfolio.

Non-Interest Expense. Non-interest expense, excluding the charitable
contribution recognized in fiscal 1998, for the nine months ended March 31, 1999
increased $6.8 million, or 38.9%, as compared to $17.5 million reported for the
same period of fiscal 1998.  The increase in non-interest expense was primarily
due to increases in compensation and employee benefits, including senior
management additions, compensation costs associated with the establishment of
the Bank's new Multifamily Lending Department and the addition of the ESOP
and the MRP. In addition, the Bank expects non-interest expense to increase in
future periods as a result of the Bank's opening of a public accommodation
office and the opening of two new full-service branches in Staten Island during
the third quarter of fiscal 1999.

Income Taxes.  The Company's effective consolidated tax rate for the nine month
period ended March 31, 1999 was 37.99% as compared to (29.8)% reported for the
comparable period last year. The nine month period ended March 31, 1998 rate
includes the effect of funding the Foundation. Excluding the effect of the
Foundation, the Company's effective tax rate was 40.5%. The reduction of the
Company's effective tax rate is primarily due to the Bank's utilization of
various tax-planning strategies


Liquidity and Capital Resources

The Bank's primary sources of funds are deposits, proceeds from the principal
and interest payments on loans, mortgage-backed and mortgage-related and
investment securities, and to a significantly lesser extent, proceeds from the
sale of fixed-rate mortgage loans to the secondary market. While maturities and
scheduled amortization of loans and securities are predictable sources

                                       18
<PAGE>
 
of funds, deposit outflows, mortgage prepayments and mortgage loan sales are
greatly influenced by general interest rates, economic conditions and
competition.

The primary investing activities of the Bank are the origination of primarily
residential one- to four- family, multifamily and, to a lesser extent,
commercial real estate, construction and development and other loans and the
purchase of mortgage-backed and mortgage-related and investment securities.
During the three and nine month periods ended March 31, 1999 and 1998, the
Bank's loan originations totaled $142.5 million, $428.8 million, $42.0 million
and $113.3 million, respectively. Purchases of mortgage-backed, mortgage-related
and investment securities totaled $156.7 million, $282.7 million, $511.0
million, and $678.3 million for the three and nine month periods ended March 31,
1999 and 1998, respectively. These activities were funded primarily by deposit
growth and principal repayments and prepayments on loans, mortgage-backed and
mortgage-related securities and investment securities, and advances from the
FHLB and the net proceeds received from the Conversion. As of March 31, 1999,
the Bank experienced a net increase in total deposits of $612.1 million, or
64.4%, as compared to the $950.8 million at June 30, 1998. Deposit flows are
affected by the level of interest rates, the interest rates and products offered
by local competitors and the Bank and other factors.

The Bank closely monitors its liquidity position on a daily basis. Excess short-
term liquidity is invested in overnight federal funds sold. In the event the
Bank should require funds beyond its ability to generate them internally,
additional sources of funds are available through repurchase agreements and
advances from the FHLB. The Bank has recently begun to place a greater level of
emphasis on the utilization of borrowed funds to fund asset growth. In this
regard, at March 31, 1999, the Bank had total borrowings of $656.8 million, of
which $640.0 million were in the form of advances from the FHLB and
approximately $16.8 million were in the form of reverse repurchase agreements.
The Bank may continue to increase such emphasis, which may result in an increase
in the Bank's average cost of funds.

Loan commitments totaled $145.5 million at March 31, 1999, were comprised of
$45.0 million in one- to four- family loan commitments, $21.1 million in
multifamily loan commitments, $12.1 million in commercial real estate loan
commitments, $36.0 million in construction loan commitments, $2.9 million in
commercial loan commitments, $16.8 million in home equity loan commitments and
$11.6 million in other loan commitments. In addition, management estimates that
an increased level of loan commitments will arise as a result of the most recent
formation of the Bank's Multifamily Lending Division established in the fourth
quarter of fiscal 1998. Management of the Bank anticipates that it will have
sufficient funds available to meet its current loan commitments. Certificates of
deposit which are scheduled to mature in less than one year from March 31, 1999,
totaled $470.9 million. Based upon past experience and the Bank's current
pricing strategy, management believes that a significant portion of such
deposits will remain with the Bank.

At March 31, 1999, the Bank exceeded all of its regulatory capital requirements
with a leverage capital level of $289.7 million, or 21.7% of adjusted assets,
which is above the required level of $105.3 million, or 4.0% of adjusted assets
and risk-based capital of $303.1 million, or 22.7% of adjusted assets, which is
above the required level of $107.0 million, or 8.0%.

The Company's most liquid assets are cash, due from banks and federal funds
sold. The levels of these assets are dependent on the Bank's operating,
financing, lending and investing activities during any given period. At March
31, 1999, cash and due from banks and federal funds sold totaled $140.9 million,
or 5.3% of total assets.

                                       19
<PAGE>
 
Year 2000 Compliance

The "Year 2000" Problem, as it is generally referred to, concerns the inability
of certain computer hardware and software systems and associated applications to
correctly recognize and process dates beyond December 31, 1999. Many computer
programs were developed using only six digits to define the date field in their
programs. Computer programs used by the Company, its suppliers or outside
service providers that have date-sensitive software may recognize "00" as the
year 1900, rather than the year 2000. Due to the nature of financial
information, calculations that rely on the integrity of the date field for the
correct processing of information could be significantly misstated, if
corrective action is not timely taken.

State of Readiness

The Company has implemented a detailed Year 2000 Plan, according to the
guidelines of the FFIEC, to evaluate the Year 2000 compliance of its computer
systems and the equipment which supports the operation of the Company. The
Company initiated formal communications with all of its service providers,
vendors, major fund providers, major borrowers and companies with which it has
material investments, to determine the extent to which it may be vulnerable to
the inability of those parties to remediate their own Year 2000 issues. The
Company has received formal communication from 100% of the service providers,
vendors, major fund providers, major borrowers and companies contracted to
provide Year 2000 compliance assurances.

The Company's vendor relationships cover a wide range of services which may or
may not be subject to a contractual agreement. Where a contractual relationship
exists between the Company and a provider of services, and the Company is
exposed to potential liability due to a failure on the part of the vendor to
provide the service, whether due to Year 2000 or some other issue, the vendor
would necessarily be subject to a breach of contract suit. In order to minimize
the risk of material loss or disruption of the Company's business due to an
issue involving date sensitive processing, the Company has required all of these
vendors to provide written assurances that they are proactively addressing Year
2000 issues within their operations. The Company has received written assurances
from all of the 19 vendors it has contacted for Year 2000 compliance. A
violation of such written assurances may constitute a breach of contract by such
vendor, thereby allowing the Company to institute legal proceedings against such
vendor. The Company can give no assurance as to either the circumstances under
which it would institute such legal proceedings or the probable degree of
success of such action. The Company is participating in testing all products and
services from these vendors. The initial two phases of testing have been
completed. A third and final testing cycle will be completed by the end of the
fourth quarter of fiscal 1999.

Like many financial institutions, the Company relies upon computers for the
daily conduct of its business and for data processing generally. The Company
utilizes a combination of in house and service bureau applications, with the
bulk of customers account processing being handled by a leading national vendor
of data processing services for financial institutions. The Company has received
assurances that this service provider has completed its internal remediation of
programs, and has substantially completed its remediation of issues related to
interdependencies with other parties. However, these assurances are not
guarantees and may not be enforceable. The vendor

                                       20
<PAGE>
 
has provided the Company with a Year 2000 compliant version of its system. The
Company has been participating with the service provider, in the testing of both
direct and indirect services which commenced in November 1998, and will continue
through the second quarter of 1999.

The Company does not anticipate that there will be any significant or material
condition which will impact this service provider's ability to deliver accurate
data processing services before, during and after the transition to the new
millennium.  Further, results of system tests conducted by the Company and by
other users of this service provider will be carefully monitored to ensure that
all issues have been identified and successfully remediated.

The balance of the Company's internal processing is supported by PC based
systems, using industry standard software to run non-mission critical
applications.  Any software program or application which was not supported by
the vendor, or which required an update to achieve Year 2000 capability, has
been identified for replacement or upgrade.  Equipment which contains embedded
chips or microprocessors has also been tested and scheduled for upgrade or
replacement where necessary.  All such system enhancements are expected to be
completed by June 30, 1999.  The cost to remediate these systems is immaterial,
and is being expensed in the period in which it occurs.  The majority of the
related expense is expected to be incurred in the Company's fiscal year ended
June 30, 1999 operating results.

The Company believes it has developed an effective plan to address the Year 2000
problem and based on available information and the steps taken to date, its Year
2000 transition will not have a material effect on its business, operations or
financial results.  However, the Company has no control over the progress of
third parties in addressing their own Year 2000 issues.  If the necessary
changes are not effected or are not completed in a timely manner, or if
unanticipated problems arise, there may be a material impact on the Company's
financial condition and results of operations.

Cost to Address the Company's Year 2000 Issues

The Company's cost to achieve Year 2000 compliance are not expected to have a
material financial impact on the Company.  The Company intends to fund such
costs from its current operations.  However, as stated above, there can be no
assurance that all such costs have been identified, or that there may not be
some unforeseen cost which may have a material adverse effect on the Company's
financial condition and results of operations.  The Company's 1998 expense
relative to the Year 2000 issue was approximately $100,000 and anticipates that
in 1999 the expense will be approximately $120,000.

Risk of Year 2000 Issues

To date, the Company has not identified any system which presents a material
risk of failing to be Year 2000 compliant in a timely manner, or for which a
suitable alternative cannot be implemented.  However, as the Company progresses
with its Year 2000 transition, systems or equipment may be identified which
present a material risk of business interruption.  Such disruption may include
the inability to process customer accounting transactions, including deposits,
withdrawals, loan payments and disbursements; the inability to reconcile and
record daily activity; the inability to process loan applications or to track
delinquencies; the inability to generate checks or to clear funds.  In addition,
if any of the Company's major borrowers should fail to achieve Year 2000
compliance, and should they experience a disruption of their own 

                                       21
<PAGE>
 
businesses, their ability to meet their obligations to the Company may be
seriously impaired.

To mitigate credit risk the Company has contacted all of its unsecured
commercial borrowers to survey their Year 2000 readiness in order to anticipate
any potential exposure.  The Company also surveys all new commercial borrowers
for Year 2000 readiness.  The Company has not contacted its largest dollar
deposit customers to determine their readiness for Year 2000 because such
customers comprise a small percentage of the Company's deposit base.

To the extent that the risks posed by the Year 2000 problem are pervasive in
data processing and telecommunication services worldwide, or the extent that
disruption of a power utility prevents the Company from gaining access to its
systems, the Company cannot predict with certainty that it will remain
materially unaffected by issues related to the Year 2000 problem, which are
beyond the Company's control.

Contingency Plans

The Company has a contingency plan in operation as of November 1998 which it
will update as necessary.  The plan identifies components of mission critical
applications which are judged, at some point prior to December 31, 1999, to be
at risk of failure to achieve complete renovation, validation and
implementation.  The Contingency Plan will ensure that the Company has
sufficiently planned for unanticipated system failures at critical production
dates before, on and after January 1, 2000.  The contingency plan was completed
in November 1998.  The Company's internal contingency committee meets monthly to
monitor the plan and to monitor current testing of service providers.  Any
changes to be made to the contingency plan will be finalized upon completion of
testing by the end of the fourth quarter of fiscal 1999.  The Company expects to
complete its Year 2000 testing of all mission critical systems prior to any date
of potential disruption.

The plan would be invoked if unanticipated Year 2000 problems occur in
production, similar to Disaster Recovery Plans.  Essentially, it requires that
resources are planned for deployment to ensure that such an interruption does
not threaten the viability of the Company.  The Company will modify its current
Disaster Recovery Plan to specifically address the special circumstances of a
disruption due to a Year 2000 related component failure.

The discussion above contains certain forward-looking statements.  Actual
results may differ materially from the Company's expectations due to the nature
and uncertainty of circumstances surrounding the Year 2000 problem.  The Company
may fail to identify systems that are not Year 2000 compliant, or the Company or
other parties may fail to meet the dates and goals set above. If so, the extent
and nature of efforts to then address those contingencies, to repair or replace
the affected systems, the Company's ability to obtain qualified personnel,
consultants or other resources and the success of those efforts cannot be stated
with any degree to certainty.

Current Legislation

Currently, legislation is pending that would broaden the activities in which
bank holding companies and banks may engage, and restructure the regulation of
financial service companies. The legislation would, however, restrict the
activities of unitary savings and loan holding companies, subject to a
grandfather for existing unitary savings and loan holding companies, such as the
Company.  The Company is unable to predict whether legislation will be enacted
or 

                                       22
<PAGE>
 
the extent to which the legislation would impact competition or restrict or
disrupt its operations.

ITEM 3. QUANTITATIVE AND QUALITIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and qualitative disclosure about market risk is presented at June
30, 1998 in Item 7a. to the Company's Annual Report on Form 10-K, filed with the
Securities and Exchange Commission on August 27, 1998.  There have been no
material changes in the Company's market risk at March 31, 1999 as compared to
June 30, 1998.  The following is an update of the discussion provided therein:

General.  The Company's largest component of market risk continues to be
interest rate risk. Substantially all of this risk continues to reside at the
Bank level.  The Bank still is not subject to foreign currency exchange or
commodity price risk.  At March 31, 1999, neither the Company nor the Bank owned
any trading assets, nor did they participate in hedging programs, interest rate
swaps or other activities involving the use of off-balance sheet derivative
financial instruments.

Gap Analysis.  At March 31, 1999, the Company's estimated one-year "gap"
position, the difference between the amount of interest-earning assets maturing
or repricing within one year and interest-bearing liabilities maturing or
repricing within one year, was a positive $140.0 million, representing a one-
year interest sensitivity gap as a percentage of total assets of 5.3%.
Accordingly, during a period of rising interest rates, the Company, having a
positive gap position, would be in a better position to invest in higher
yielding assets which, consequently, may result in the yield on its assets
increasing at a pace more closely matching the increase in the cost of its
interest-bearing liabilities than if it had a negative gap.  During a period of
falling interest rates, an institution with a positive gap would tend to have
its assets repricing at a faster rate than one with a negative gap which,
consequently, may tend to restrain the growth of its net interest income or
result in a decrease in interest income.

Interest Rate Risk Compliance. The Company continues to monitor the impact of
interest rate volatility upon net interest income and net portfolio value in the
same manner as at June 30, 1998. There have been no changes in the Board of
Directors approved limits of acceptable variance in net interest income and net
portfolio value at March 31, 1999, compared to June 30, 1998, and the projected
changes continue to fall within the Board of Directors approved limits at all
levels of potential interest rate volatility.

                                       23
<PAGE>
 
                          PART II - OTHER INFORMATION
                          ---------------------------
                                        

ITEM 1.   LEGAL PROCEEDINGS
--------------------------

          The Company is not involved in any pending legal proceedings other
          than routine legal proceedings occurring in the ordinary course of
          business. Such routine legal proceedings, in the aggregate, are
          believed by management to be immaterial to the Company's financial
          condition or results of operation.

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS
---------------------------------------------------
          Not applicable

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES
-----------------------------------------
          Not applicable

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

          On February 25, 1999, the Company held a special meeting of
          stockholders to approve and adopt the Agreement and Plan of Merger,
          dated as of July 19, 1998, by and between Richmond County Financial
          Corp. and Bayonne Bancshares, Inc., as amended and restated as of
          October 14, 1998, pursuant to which, among other things, Bayonne
          Bancshares, Inc. merged with and into Richmond County Financial Corp.
          effective March 22, 1999. The number of votes cast at the meeting was:

<TABLE>
<CAPTION>
              FOR            AGAINST           ABSTAIN           NON-VOTE
          -----------     -------------     -------------     --------------
          <S>             <C>               <C>               <C>
           15,983,626        243,978            58,948           4,791,392
</TABLE>
                                        
          On February 25, 1999, the Company held a special meeting of
          stockholders to ratify certain amendments to the Richmond County
          Financial Corp. 1998 Stock-Based Incentive Plan. The number of votes
          cast at the meeting was:

<TABLE>
<CAPTION>
             FOR            AGAINST           ABSTAIN           
          -----------     -------------     -------------     
          <S>             <C>               <C>
           19,941,114        956,065           170,979
</TABLE>
                                        
ITEM 5.   OTHER INFORMATION
---------------------------
          Not applicable
 
ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K
------------------------------------------

     (a)  Exhibits
          --------

     2.1  Plan of Conversion (including the Restated Organization Certificate
          and Stock Bylaws of Richmond County Savings Bank).*
     3.1  Certificate of Incorporation of Richmond County Financial Corp.*
     3.2  Bylaws of Richmond County Financial Corp.*
     10.5 Employment Agreement between Richmond County Savings Bank and Michael
          J. Gagliardi.
     10.6 Employment Agreement between Richmond County Savings Bank and Thomas
          R. Lupo.

                                       24
<PAGE>
 
   10.7   Employment Agreement between Richmond County Savings Bank and Michael
          A. Nilan.
   10.13  Form of Proposed Amended and Restated Richmond County Financial Corp.
          1998 Stock Based Incentive Plan.**
   11.0   Statements re: Computation of Per Share Earnings.
   27.0   Financial Data Schedule.

   (b)    Report on Form 8-K
          ------------------

          On March 23, 1999, Richmond County filed a Report on Form 8-K to
          announce the consummation of its acquisition of Bayonne Bancshares,
          Inc., as well as to announce the consummation of the merger of First
          Savings Bank of New Jersey with and into Richmond County Savings Bank.

          On March 8, 1999, Richmond County filed a Report on Form 8-K to
          announce the consummation of its acquisition of Ironbound Bankcorp,
          NJ, as well as to announce the consummation of the merger of Ironbound
          Bank with and into Richmond County Savings Bank.

*     Incorporated by reference from the Form S-1 (Registration No. 333-37009),
      as amended, filed on October 2, 1997.
**    Incorporated by reference from document filed pursuant to Rule 424(b)(3)
      (Registration No. 333-66749), filed with the SEC on February 1, 1999.

                                       25
<PAGE>
 
                                 Exhibit Index
                                 -------------

Exhibit Number      Identification of Exhibit
--------------      -------------------------
10.5                Employment Agreement between Richmond County Savings Bank
                    and Michael J. Gagliardi.
 
10.6                Employment Agreement between Richmond County Savings Bank
                    and Thomas R. Lupo.
 
10.7                Employment Agreement between Richmond County Savings Bank
                    and Michael A. Nilan.
 
11.0                Statements re:  Computation of Per Share Earnings.
 
27.0                Financial Data Schedule.
 

                                       26
<PAGE>
 
                                   SIGNATURE


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                        RICHMOND COUNTY FINANCIAL CORP.
                                 (Registrant)


Date:     May 17, 1999                     By:   /s/ Michael F. Manzulli
                                                 -------------------------------
                                                 Michael F. Manzulli
                                                 Chairman of the Board and
                                                 Chief Executive Officer
 
 
Date:     May 17, 1999                     By:   /s/ Thomas R. Cangemi
                                                 -------------------------------
                                                 Thomas R. Cangemi
                                                 Senior Vice President and
                                                 Chief Financial Officer

                                       27