New York Bancorp Inc. and Subsidiary
SELECTED CONSOLIDATED FINANCIAL & OTHER DATA
- ----------------------------------------------------------------------------------------------

Year Ended September 30,
-----------------------------------------------------
1996 1995 1994(1) 1993(1) 1992(1)
------- --------- --------- ---------- ---------
(In Thousands, Except Per Share Amounts)

OPERATING DATA:
Interest income...................... $207,491 $196,972 $175,530 $160,752 $152,417
Interest expense..................... 106,746 101,730 79,948 71,385 84,415
-------- -------- -------- -------- --------
Net interest income................ 100,745 95,242 95,582 89,367 68,002
Provision for possible loan losses... (1,200) (1,700) (2,650) (4,700) (8,404)
-------- -------- -------- -------- --------
Net interest income after provision
for possible loan losses.......... 99,545 93,542 92,932 84,667 59,598
-------- -------- -------- -------- --------
Non-interest income:
Loan fees and service charges...... 2,770 2,566 3,292 3,341 3,196
Net gain (loss) on the sales of
mortgage loans and securities
available for sale................ 4,750 (1,088) 214 3,857 13,185
Net loss on financial futures
transactions...................... -- -- -- (495) --
Other.............................. 7,147 5,134 4,494 4,481 2,604
-------- -------- -------- -------- --------
Total non-interest income........ 14,667 6,612 8,000 11,184 18,985
-------- -------- -------- -------- --------
General and administrative expenses.. 47,535 48,968 50,845 48,455 42,374
-------- -------- -------- -------- --------
Merger and restructuring expense..... -- 19,024 -- -- --
-------- -------- -------- -------- --------
Real estate operations, net.......... 463 883 880 1,296 3,413
-------- -------- -------- -------- --------
SAIF recapitalization expense........ 9,432 -- -- -- --
-------- -------- -------- -------- --------
Income before income tax expense
and extraordinary item and
cumulative effect of change in
accounting principle................ 56,782 31,279 49,207 46,100 32,796
Income tax expense................... (24,776) (19,717) (21,740) (20,912) (15,346)
Extraordinary item, early
extinguishment of debt.............. -- -- -- -- (570)
Cumulative effect of change in
accounting for income taxes......... -- -- 5,685 -- --
-------- -------- -------- -------- --------
Net income .......................... $32,006 $11,562 $33,152 $25,188 $16,880
======== ======== ======== ======== ========

Earnings per common share:
Income before extraordinary item
and cumulative effect of change
in accounting principle............ $ 2.68 $ .87 $ 2.02 $ N/M(4) $ N/M(4)
Net income.......................... $ 2.68 $ .87 $ 2.44 $ N/M(4) $ N/M(4)

Book value per share(2)............... $13.69 $12.88 $12.95 $11.75 $ N/M(4)

Dividends per share(2), (3)........... $ .80 $ .80 $ .78 $ .64 $ .45

Dividend payout ratio(2), (3)......... 29.85% 76.92% 24.84% 29.36% 25.71%

September 30,
-----------------------------------------------------------
1996 1995 1994(1) 1993(1) 1992(1)
---------- ---------- ---------- ---------- ----------
(In Thousands)

FINANCIAL CONDITION DATA:
Total assets......................... $2,940,907 $2,731,592 $2,583,982 $2,250,605 $2,153,861
First mortgage loans, net............ 1,586,046 1,370,175 1,134,882 1,078,960 977,017
Other loans, net..................... 267,116 294,768 297,472 309,457 322,746
Loans receivable, net.............. 1,853,162 1,664,943 1,432,354 1,388,417 1,299,763
Mortgage-backed securities held
to maturity........................ 550,817 664,726 785,593 439,605 448,296
Mortgage-backed securities available
for sale............................ 280,429 206,794 171,983 234,236 76,707
Debt securities held to maturity..... 643 21,179 52,984 4,662 26,620
Debt and equity securities
available for sale.................. 136,133 46,273 180 -- 67
Federal Home Loan Bank stock......... 27,938 20,288 17,409 21,734 20,876
Money market investments............. 10,700 13,915 21,844 77,261 192,758
Trading account securities........... -- 2,003 12,939 12,487 12,242
Deposits............................. 1,715,959 1,748,874 1,791,514 1,758,102 1,782,764
Borrowed funds....................... 1,008,786 767,138 578,897 293,693 222,850
Shareholders' equity................. 151,903 156,386 171,291 153,769 99,933(5)

September 30,
-----------------------------------------------------------
1996 1995 1994(1) 1993(1) 1992(1)
---------- ---------- ---------- ---------- ----------

SELECTED FINANCIAL RATIOS & OTHER DATA:
Return on average assets............. 1.16% .44% 1.35% 1.16% .89%
Return on average shareholders'
equity.............................. 20.26 6.81 20.13 18.74 17.81
Shareholders' equity to assets....... 5.17 5.73 6.63 6.83 4.64
Net interest rate spread............. 3.47 3.43 3.73 3.99 3.47
Net interest margin.................. 3.71 3.68 3.95 4.23 3.68
Efficiency ratio (6)................. 42.96 47.57 49.19 49.86 57.42
Nonaccrual loans and real estate
owned, net, as a percentage of
total assets........................ .98 1.18 1.64 2.02 2.08
Allowance for possible loan losses as
a percentage of nonaccrual loans.... 75.87 70.04 70.23 69.02 54.87
Average interest-earning assets
to average interest-bearing
liabilities......................... 105.86 106.47 106.82 107.04 104.67
CUSTOMER SERVICE FACILITIES:
Full service......................... 29 27 26 26 29
Loan production offices.............. 7 6 6 6 7
Executive office..................... 1 1 1 1 1

(1) On January 27, 1995, Hamilton Bancorp, Inc. was merged with and into New
York Bancorp Inc. The merger was accounted for as a pooling of interests
and, accordingly, all prior periods include the consolidated results of
Hamilton Bancorp, Inc.
(2) Per share amounts have been calculated to fully reflect the 3-for-2 stock
splits effective October 22, 1992 and July 29, 1993 and the ten percent
stock dividend effective February 14, 1994.
(3) Dividends per share, and the dividend payout ratio, have not been restated
for the merger with Hamilton Bancorp, Inc.
(4) N/M - Hamilton Bancorp, Inc. converted to stock ownership on April 1, 1993.
Accordingly, restated per share data is not meaningful.
(5) Includes only the retained earnings of Hamilton Bancorp, Inc. which
converted to stock ownership on April 1, 1993.
(6) The efficiency ratio is computed by dividing general and administrative
expenses by the sum of net interest income and non-interest income
(exclusive of gains (losses) on the sales of mortgage loans and securities
available for sale).

New York Bancorp Inc. and Subsidiary
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------

GENERAL
New York Bancorp Inc. ("New York Bancorp" or the "Company") is a savings and
loan holding company. The Company, through its subsidiary, Home Federal Savings
Bank (the "Bank"), operates as a community savings bank. The Bank's principal
business consists of attracting deposits from the general public and investing
these deposits, together with funds from ongoing operations and borrowings, in
the origination and purchase of residential and commercial mortgage loans,
cooperative residential loans and consumer loans. The Bank also maintains a
portion of its assets in mortgage-backed securities and debt and equity
securities, including obligations of the U.S. Government and federal agencies,
money market investments, corporate notes and other securities.

On January 27, 1995, Hamilton Bancorp, Inc. ("Hamilton"), the parent company of
Hamilton Federal Savings F.A. ("Hamilton Savings") was merged with and into New
York Bancorp. This transaction was accounted for as a pooling of interests, and,
as a result, the financial results for the periods prior to the merger reported
in the accompanying management's discussion and analysis and consolidated
financial statements include the results of Hamilton.

As part of the Company's strategy to find ways to best utilize its available
capital, during fiscal year 1996 New York Bancorp continued its stock repurchase
program by repurchasing 1,214,212 shares of its common stock, bringing the total
number of Treasury shares to 3,648,050 and the total number of outstanding
common shares to 11,098,800 at September 30, 1996.

EARNINGS SUMMARY
New York Bancorp earned net income of $32.0 million, or $2.68 per share, for the
year ended September 30, 1996, representing a 20.26% return on average
stockholders' equity. The results for the year include the recognition of a
one-time charge of $9.4 million representing the Bank's assessment to
recapitalize the Savings Association Insurance Fund (the "SAIF") of the Federal
Deposit Insurance Corporation (the "FDIC"). Excluding the SAIF recapitalization
charge, net income for the year ended September 30, 1996 would have amounted to
$37.4 million, or $3.13 per share, representing a 23.69% return on average
stockholders' equity. Net income for the year ended September 30, 1995 amounted
to $11.6 million, or $.87 per share, which included $16.1 million in after tax
non-recurring costs and $.7 million in an after tax loss on the sale of
securities, both of which were incurred in connection with the Hamilton merger.
Excluding these merger-related charges, net income for the year ended September
30, 1995 would have amounted to $28.4 million, or $2.14 per share.

ASSET/LIABILITY MANAGEMENT
The Company is subject to interest rate risk to the extent that its
interest-bearing liabilities reprice or mature more or less frequently, or on a
different basis, than its interest-earning assets. The Company's primary
approach to controlling interest rate risk and maximizing net interest margin
emphasizes gap management. The Company does not have a mandated targeted gap,
but historically has managed the gap so that it will range from a modest
positive to a modest negative position, which would generally result in
upper-end ranges of positive to negative positions of 15%. The size and
direction of the gap is determined by management, reflecting its views on the
direction of interest rates and general market conditions. The Company's
cumulative one year gap as a percent of total interest-earning assets moved from
a negative 12.51% at September 30, 1995 to a negative 2.85% at September 30,
1996, reflecting the effect of the $700.0 million in interest rate collar
arrangements which reduce the Company's interest rate risk exposure to a rising
interest rate environment.

A negative gap denotes liability sensitivity which in a given period will result
in more liabilities than assets being subject to repricing. Generally, liability
sensitive gaps would result in a net positive effect on net interest margin and,
consequently, net income in a declining interest rate environment.
Alternatively, liability sensitive gaps would generally result in a net negative
effect on net interest margin and, consequently, net income in an increasing
interest rate environment.

The Company manages its interest rate risk exposure by investing in adjustable
rate mortgage and other loans and securities, multi-tranche fixed rate REMIC
securities which generally have an estimated average life of five years, and an
assortment of fixed rate loans and securities. At September 30, 1996, 57.5% of
such interest-earning assets were adjustable rate assets, and the average lives
of the fixed rate REMIC securities was approximately 5.4 years. The Company also
may choose to extend the maturity of its funding source and/or reduce the
repricing mismatches by using interest rate swaps and financial futures
arrangements. Additionally, the Company uses interest rate collar, interest rate
floor, and interest rate cap arrangements to assist in further insulating the
Company from volatile interest rate changes.

Adjustable rate mortgage and mortgage-backed securities generally contain
interim and lifetime caps which limit the amount the interest rate can increase
or decrease at repricing dates. Since the Company's liabilities are not
similarly affected, the Company could be adversely affected in a rising interest
rate environment. Increasing interest rates would also tend to extend the lives
of fixed rate mortgages and mortgage-backed securities, which could adversely
affect net interest income. In a declining interest rate environment, the
Company faces interest rate risk as higher rate fixed rate loans prepay due to
the borrowers refinancing at lower rates. The cash flows from such prepayments
would be reinvested in interest-earning assets at then current market rates.

At September 30, 1996, the mortgage-backed securities portfolios had an
estimated average life of approximately 5.3 years. Assuming an immediate and
parallel shift of 300 basis points in the yield curve, the estimated average
life of these portfolios would extend to approximately 6.6 years. The Bank
considers its investment in mortgage-backed securities as a separate investment
category from mortgage loans because of the liquidity characteristics of these
instruments. The Bank further segregates its mortgage-backed securities holdings
as either held to maturity or available for sale. At September 30, 1996, the
Bank's portfolios of mortgage-backed securities represented 28.3% of total
assets. Such mortgage-backed securities are either guaranteed by the FHLMC, GNMA
or FNMA, or constitute REMIC and private-issue pass-through mortgage-backed
securities which are virtually all rated AAA by nationally recognized rating
services.

The Bank is a party to interest rate swap arrangements to extend the repricing
or maturity of its liabilities in order to create a more consistent and
predictable interest rate spread. At September 30, 1996, outstanding notional
amounts of interest rate swap arrangements totaled $600.0 million as follows (in
thousands):

Fixed Variable
Notional Interest Rate Interest Rate
Amount Paying Receiving Maturity
-------- ------------- -------------- ----------

$ 100,000 5.260% 5.438% December 1996 (1)
100,000 5.265% 5.438% December 1996 (1)
50,000 4.785% 5.438% June 1997 (2)
50,000 4.780% 5.438% June 1997
50,000 4.770% 5.438% June 1997
50,000 4.774% 5.438% June 1997 (2)
50,000 4.748% 5.438% June 1997
50,000 4.743% 5.438% June 1997 (2)
50,000 4.700% 5.438% June 1997
50,000 4.700% 5.438% June 1997 (2)
---------
$ 600,000
=========

____________________
(1)These $200 million in interest rate swaps have been extended through June
1997 whereby the fixed interest pay rate will be 4.69% beginning in December
1996.
(2)In an effort to secure the hedge position provided against interest rate
risk, the Bank in July 1996 terminated its position as a party to $200.0
million of interest rate swaps for the six month period December 1996 through
June 1997. The gain of $1.5 million from these terminated interest rate swaps
is being deferred, and will be amortized as a reduction of interest expense
over the period December 1996 through June 1997.

Further, at September 30, 1996, the Bank maintained $700.0 million of interest
rate collar arrangements which mature in August 1998. These interest rate
collars provide for the Bank to receive payment when three month LIBOR exceeds
7.5%, and requires the Bank to pay when three month LIBOR is less than 5.00%,
thereby reducing the Bank's exposure to a rising interest rate environment. At
September 30, 1996 three month LIBOR was 5.625%.

Additionally, in an effort to further protect against interest rate risk
associated with the repricing of its interest-bearing deposit liabilities, the
Bank was a party to $1.0 billion of interest rate floor agreements which were
scheduled to expire on February 22, 1998. During the third quarter of fiscal
year 1995, in an effort to secure the hedge position provided against the
aforementioned interest rate risk, the Bank terminated its position as a party
to the $1.0 billion of interest rate floor agreements. Accordingly, and in
conformity with generally accepted accounting principles, the Bank deferred
recognition of the gain on the terminated interest rate floor agreements and is
amortizing such gain as an adjustment to the cost of interest-bearing deposit
liabilities over the original contractual life of the interest rate floor
agreements. At September 30, 1996 the amount of the unamortized gain was $4.3
million.

At September 30, 1996 the Bank had approximately $2.6 million in contracts for
purposes of hedging the "Standard & Poor's 500" index. The call options
maturities range from March 1999 through August 1999. The Bank uses stock
indexed call options for purposes of hedging its MarketSmart CDs and MarketSmart
I.R.A. CDs. The call options hedge the interest rate paid on these 5 year CD
deposits which is an annual percentage yield based on the changes in the
Standard & Poor's 500 Composite Stock Price Index during each of the 5 year
terms of the CDs. Premiums paid on the call options are amortized to interest
expense over the terms of the underlying CD using the straight line method.
Gains and losses, if any, resulting from the early termination of the call
option are deferred and amortized to interest expense over the remaining term of
the underlying CD. The Bank ceased offering MarketSmart CDs during fiscal year
1995 due to its inability to purchase stock indexed call options.

Although the Company's asset/liability plan is intended to protect the Company's
interest rate spread against changes in prepayment speeds caused by changes in
interest rates, there is a risk that during periods of rapidly changing interest
rates, the Company's spread could be reduced or become negative. The following
table sets forth the anticipated repricing or maturity of the Company's assets,
liabilities and yields, including the effect of off-balance sheet financial
instruments, at September 30, 1996 using assumptions based on its historical
experience and other data available to management. This table does not
necessarily indicate the impact of general interest rate movements on the
Company's net interest yield because the repricing of various assets and
liabilities is subject to customer discretion and competitive and other
pressures. As a result, assets and liabilities indicated as repricing within the
same period may in fact reprice at different times and at different rate levels.

11
4

New York Bancorp Inc. and Subsidiary
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
- --------------------------------------------------------------------------------

At September 30, 1996
-------------------------------------------------------------------------------------------
More More More
More than than than than Over
6 Months 6 Months 1 Year 3 Years 5 Years 10
or Less to 1 Year to 3 Years to 5 Years to 10 Years Years Total Yield
--------- --------- ---------- ---------- ----------- ------- ----------- -------
(Dollars in Thousands)

INTEREST-EARNING ASSETS:
First mortgage loans(1)... $ 380,867 $ 383,942 $ 405,953 $ 272,729 $88,003 $ 72,275 $1,603,769 8.01%
Other loans............... 131,226 29,382 50,376 31,082 19,307 7,406 268,779 8.63
Mortgage-backed
securities(2)............ 114,083 89,508 180,414 121,875 319,272 6,094 831,246 6.62
Debt and equity securities 5,346 4,937 125,300 550 -- 643 136,776 6.83
Federal Home Loan Bank
stock.................... 27,938 -- -- -- -- -- 27,938 6.50
Money market
investments.............. 10,700 -- -- -- -- -- 10,700 5.60
-------- --------- -------- -------- ------- ------- --------
Total interest-earning
assets................ 670,160 507,769 762,043 426,236 426,582 86,418 2,879,208 7.59
-------- --------- -------- -------- ------- ------- ---------
INTEREST-BEARING LIABILITIES:
Demand and NOW
accounts(3).............. 4,201 4,201 15,504 14,004 29,408 100,526 167,844 1.04
Money market deposit
accounts(3).............. 20,034 20,034 47,681 23,340 18,632 3,807 133,528 2.98
Passbook savings and
club accounts(3)......... 71,703 71,703 206,408 132,105 157,906 77,002 716,827 2.36
Certificate accounts...... 292,829 166,027 185,223 52,823 858 -- 697,760 4.86
Borrowed funds............ 952,406 48,780 7,600 -- -- -- 1,008,786 5.25
--------- --------- -------- -------- ------- ------- ---------
Total interest-bearing
liabilities........... 1,341,173 310,745 462,416 222,272 206,804 181,335 2,724,745 4.02
--------- --------- -------- -------- ------- ------- ---------
INTEREST RATE HEDGING (4)... 792,000 (400,000) (392,000) -- -- --
INTEREST SENSITIVITY GAP
PER PERIOD................. 120,987 (202,976) (92,373) 203,964 219,778 (94,917)
--------- --------- -------- -------- ------- -------
CUMULATIVE INTEREST
SENSITIVITY GAP............ $ 120,987 $ (81,989) $(174,362) $ 29,602 $ 249,380 $154,463
========= ========= ========= ========= ========= ========
CUMULATIVE GAP AS A
PERCENT OF TOTAL INTEREST-
EARNING ASSETS............. 4.20% (2.85)% (6.06)% 1.03% 8.66% 5.36%
==== ===== ===== ==== ==== ====
CUMULATIVE NET INTEREST-
SENSITIVE ASSETS AS A
PERCENT OF INTEREST-
SENSITIVE LIABILITIES...... 4.44% (3.01)% (6.40)% 1.09% 9.15% 5.67%
==== ===== ===== ==== ==== ====
- -----------------------
(1) Assumes a prepayment rate for fixed rate mortgage loans of 10% for coupons less than 8.00%, a prepayment rate of 13.00%
for coupons ranging from 8.00% to 8.99%, a prepayment rate of 18.00% for coupons ranging from 9.00% to 9.99%, and
prepayment rates of 22.00% to 26.00% for coupons of 10.00% or higher. These prepayment assumptions are based on actual
prepayments experienced and market assumptions for each interest rate range.
(2) Assumes mortgage-backed securities prepay using actual prepayment rates experienced on the underlying securities.
(3) Assumes NOW accounts, money market deposit accounts and passbook savings and club accounts will be withdrawn at annual
rates of 5.00%, 30.00% and 20.00%, respectively, based on their declining balance, reflecting the Bank's experience.
(4) The effect of the interest rate collars is reflected based upon a distribution table distributed by the Office of Thrift
Supervision for such arrangements when payments are not being remitted due to current interest rates.

ANALYSIS OF CORE EARNINGS
The Company's profitability is primarily dependent upon net interest income,
which represents the difference between income on interest-earning assets and
expense on interest-bearing liabilities. Net interest income is dependent on the
average balances and rates received on interest-earning assets, the average
balances and rates paid on interest-bearing liabilities, and the effect of the
Bank's off-balance sheet financial instruments which are used to manage the
repricing characteristics of interest-bearing liabilities. Net income is further
affected by the provision for possible loan losses, non-interest income,
non-interest expense and taxes.

The following table sets forth certain information relating to the Company's
average consolidated statement of financial condition and reflects the average
yield on assets and average cost of liabilities for the periods indicated. The
impact of interest rate swaps, interest rate collars, interest rate floors and
interest rate caps are included in the table in the respective category to which
they relate. The yields and costs are derived by dividing income or expense by
the average balance of assets (which include nonaccrual loans) or liabilities,
respectively, for the periods shown.
12

Year Ended September 30,
---------------------------------------------------------------------------------
1996 1995 1994
-------------------------- ----------------------- -----------------------
Average Yield/ Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost Balance Interest Cost
--------- -------- ------- -------- -------- ----- -------- -------- -----

(Dollars in Thousands)

ASSETS:
Interest-earning assets:
First mortgage loans....... $ 1,471,464 $118,792 8.07% $1,257,057 $104,042 8.28% $1,109,571 $93,373 8.42%
Other loans................ 281,414 24,735 8.79 303,649 25,916 8.53 301,496 24,094 7.99
Mortgage-backed
securities............... 854,660 56,921 6.66 921,198 60,331 6.55 894,938 52,521 5.87
Debt and equity
securities - taxable..... 105,190 6,774 6.44 71,158 4,877 6.85 41,876 2,976 7.11
Money market
investments............... 4,776 256 5.36 18,845 1,080 5.73 57,770 2,113 3.66
Trading account securities 220 13 5.70 12,883 726 5.63 12,689 453 3.57
---------- ------- --------- ------- ---------- -------
Total interest-earning
assets.................. 2,717,724 207,491 7.63 2,584,790 196,972 7.62 2,418,340 175,530 7.26
------- ------- -------
Non-interest-earning
assets.................... 47,678 43,442 44,864
---------- ---------- ----------
Total assets............. $2,765,402 $2,628,232 $2,463,204
========== ========== ==========

LIABILITIES AND SHAREHOLDERS'
EQUITY:
Interest-bearing liabilities:
Deposits:
Certificate accounts...... $ 736,896 37,679 5.11 $ 676,290 35,703 5.28 $ 554,676 26,614 4.80
Passbook savings and
club accounts............ 730,165 17,509 2.40 801,630 19,964 2.49 944,152 23,846 2.53
Money market
deposit accounts......... 117,363 3,357 2.86 132,187 4,054 3.07 152,872 3,926 2.57
Demand and
NOW accounts............. 159,793 1,925 1.20 148,594 2,673 1.80 139,285 2,610 1.87
---------- ------- ---------- ------- ---------- -------
Total deposits........... 1,744,217 60,470 3.47 1,758,701 62,394 3.55 1,790,985 56,996 3.18
Borrowed funds............. 822,987 46,276 5.62 669,090 39,336 5.88 472,954 22,952 4.85
---------- ------- ---------- ------- ---------- -------
Total interest-bearing
liabilities............. 2,567,204 106,746 4.16 2,427,791 101,730 4.19 2,263,939 79,948 3.53
------- ------- -------
Other liabilities.......... 40,222 30,720 34,600
---------- --------- ----------
Total liabilities........ 2,607,426 2,458,511 2,298,539
Shareholders' equity....... 157,976 169,721 164,665
---------- --------- ----------
Total liabilities and
shareholders' equity.... $2,765,402 $2,628,232 $2,463,204
========== ========== ==========
NET INTEREST INCOME/INTEREST
RATE SPREAD................. $100,745 3.47% $ 95,242 3.43% $ 95,582 3.73%
======== ====== ======== ====== ======== =====
NET EARNING ASSETS/NET
INTEREST MARGIN............. $ 150,520 3.71% $ 156,999 3.68% $ 154,401 3.95%
========== ====== ========== ====== ========== =====
PERCENTAGE OF INTEREST-
EARNING ASSETS TO
INTEREST-BEARING
LIABILITIES................. 105.86% 106.47% 106.82%
====== ====== ======

RATE/VOLUME ANALYSIS
Net interest income can also be analyzed in terms of the impact of changing
interest rates and changing volumes. The following table describes the extent to
which changes in interest rates and changes in the volume of interest-earning
assets and interest-bearing liabilities have affected the Company's interest
income and interest expense during the periods indicated. Information is
provided in each category with respect to (i) increases and decreases
attributable to changes in volume (changes in volume multiplied by prior rate),
(ii) increases and decreases attributable to changes in rates (changes in rates
multiplied by prior volume), and (iii) the net change. The change attributable
to the combined impact of volume and rate has been allocated proportionately to
the change due to volume and the change due to rate.

Year Ended September 30, 1996 Year Ended September 30, 1995
Compared to Year Ended Compared to Year Ended
September 30, 1995 September 30, 1994
Increase (Decrease) Increase (Decrease)
------------------------------ ------------------------------
Volume Rate Net Volume Rate Net
-------- -------- -------- -------- --------- --------
(In Thousands)

INTEREST INCOME ON INTEREST-EARNING
ASSETS:
First mortgage loans................ $17,235 $ (2,485) $ 14,750 $12,178 $(1,509) $10,669
Other loans......................... (1,993) 812 (1,181) 173 1,649 1,822
Mortgage-backed securities.......... (4,454) 1,044 (3,410) 1,577 6,233 7,810
Debt and equity securities
-- taxable......................... 2,171 (274) 1,897 2,003 (102) 1,901
Money market investments............ (758) (66) (824) (1,828) 795 (1,033)
Trading account securities.......... (722) 9 (713) 7 266 273
------- -------- -------- ------- ------- -------
Total income on interest-
earning assets....................... 11,479 (960) 10,519 14,110 7,332 21,442
------- -------- -------- ------- ------- -------
INTEREST EXPENSE ON INTEREST-
BEARING LIABILITIES:
Deposits:
Certificate accounts............... 3,045 (1,069) 1,976 6,237 2,852 9,089
Passbook savings and club accounts. (1,733) (722) (2,455) (3,554) (328) (3,882)
Money market deposit accounts...... (436) (261) (697) (294) 422 128
Demand and NOW accounts............ 221 (969) (748) 157 (94) 63
------- -------- -------- ------- ------ -------
Total deposits.................. 1,097 (3,021) (1,924) 2,546 2,852 5,398
Borrowed funds...................... 8,561 (1,621) 6,940 10,851 5,533 16,384
------- -------- -------- ------- ------ -------
Total expenses on interest-
bearing liabilities.................. 9,658 (4,642) 5,016 13,397 8,385 21,782
------- -------- -------- ------- ------ -------
Net interest income................... $ 1,821 $ 3,682 $ 5,503 $ 713 $(1,053) $ (340)
======= ======== ======== ======= ======= =======

Note: Nonaccrual loans are included in the volume variances.

COMPARISON OF YEARS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995

GENERAL
The Company's net income for the year ended September 30, 1996 was $32.0
million, or $2.68 per share, as compared to $11.6 million, or $.87 per share,
for the year ended September 30, 1995. Comments regarding the components of net
income are detailed in the following paragraphs.

INTEREST INCOME
Interest income on interest-earning assets for the year ended September 30, 1996
increased by $10.5 million, or 5.3%, to $207.5 million as compared with $197.0
million for the year ended September 30, 1995. The increase in interest income
was primarily attributable to a $132.9 million increase in average
interest-earning assets, resulting primarily from an increase in loans.

Interest and fees on loans for the year ended September 30, 1996 increased by
$13.6 million, or 10.4%, to $143.5 million as compared to fiscal year 1995. The
increase in loan income reflects a $192.2 million increase in the average
balance and a 26 basis point increase in the yield on other loans which,
however, were partially offset by a 21 basis point decrease in the yield on
first mortgage loans. The increase in average balance reflects the purchase of
$206.0 million of loans, combined with increased originations. Interest on
mortgage-backed securities held to maturity and mortgage-backed securities
available for sale for the year ended September 30, 1996 decreased by $3.4
million to $56.9 million as compared to fiscal year 1995. The decrease in
mortgage-backed securities income reflects a $66.5 million decrease in the
average balance of the portfolio to $854.7 million which, however, was partially
offset by an 11 basis point increase in yield to

6.66%. Interest and dividends on debt and equity securities increased by $1.9
million for the year ended September 30, 1996 to $6.8 million as compared to
fiscal year 1995. The increase in interest and dividends on debt and equity
securities reflects a $34.0 million increase in the average balance of the
portfolio to $105.2 million which, however, was partially offset by a 41 basis
point decline in the yield to 6.44%. Money market investment income declined by
$.8 million to $.3 million as compared to fiscal year 1995. The decline in money
market investment income reflects a $14.1 million decrease in the average
balance of the portfolio, coupled with a 37 basis point decrease in yield to
5.36%. Interest on trading account securities for the year ended September 30,
1996 decreased by $.7 million as compared to fiscal year 1995. This decrease was
the result of a $12.7 million decrease in the average balance of the portfolio.
The decrease in the average balance of money market investments and trading
account securities is due to the Company investing these funds in higher
yielding assets and/or utilizing the funds to reduce certain short-term borrowed
funds.

At September 30, 1996, mortgage-backed securities held to maturity had
unrealized depreciation of $16.2 million. The unrealized depreciation is due to
market yields on similar type securities being above those of the Bank's
securities. As a result of the increase in interest rates since the acquisition
of these securities, the Company earns a below market rate of interest on the
securities, and the estimated average lives of the securities are presently
longer than the estimated lives at the time of acquisition.

INTEREST EXPENSE
Interest expense on interest-bearing liabilities for the year ended September
30, 1996 increased by $5.0 million, or 4.9%, to $106.7 million as compared with
$101.7 million for the year ended September 30, 1995. The increase in interest
expense reflects a $139.4 million increase in the average balance of total
interest-bearing liabilities to $2,567.2 million. This represents a movement by
depositors from lower costing passbook savings and money market accounts to
higher costing certificate of deposit accounts, and an increase in the Bank's
higher costing borrowings to fund balance sheet growth. Partially offsetting
these factors was a decline in the cost of funds primarily due to the impact of
the Bank's use of interest rate swaps and other off-balance sheet instruments
which decreased interest expense by $3.5 million and $1.2 million for the years
ended September 30, 1996 and 1995, respectively. Further, the impact of the
Bank's use of reverse repurchase agreements with imbedded interest rate caps,
all of which had matured prior to September 30, 1995, was to decrease interest
expense by $1.6 million for the year ended September 30,1995.

Interest expense on deposits decreased $1.9 million, or 3.1%, to $60.5 million
for the year ended September 30, 1996 as compared with the year ended September
30, 1995. This decrease reflects an 8 basis point decrease in the average cost
of deposits from 3.55% in fiscal year 1995 to 3.47% in fiscal year 1996, coupled
with a $14.5 million decrease in the average balance of deposits to $1,744.2
million. Interest expense on borrowed funds increased $6.9 million, or 17.6%, to
$46.3 million for the year ended September 30, 1996 as compared to the year
ended September 30, 1995. This increase reflects a $153.9 million increase in
the average balance of borrowed funds to $823.0 million which, however, was
partially offset by a 26 basis point decrease in the average cost of borrowed
funds from 5.88% in fiscal year 1995 to 5.62% in fiscal year 1996.

PROVISION FOR POSSIBLE LOAN LOSSES
The Company provided $1.2 million and $1.7 million for possible loan losses
during the years ended September 30, 1996 and 1995, respectively. The reduction
in the provision for possible loan losses reflects the improvement of the Bank's
ratio of its allowance for possible loan losses to total nonaccrual loans which
amounted to 75.9% and 70.0% at September 30, 1996 and 1995, respectively.

At September 30, 1996, the Company's recorded investment in impaired loans was
$11.9 million, all of which were on nonaccrual status. Due to charge-offs, or
the crediting of interest payments to principal, the loans do not have an
impairment reserve at September 30, 1996. Interest income recognized on impaired
loans during the year ended September 30, 1996 amounted to approximately $.4
million, which approximated the actual interest payments received. The average
recorded investment in impaired loans during the current year was $14.5 million.
The allowance for possible loan losses contains additional amounts for impaired
loans, as deemed necessary, to maintain reserves at levels considered adequate
by management.

As part of the Bank's determination of the adequacy of the allowance for
possible loan losses, the Bank monitors its loan portfolio through its Asset
Classification Committee. The Committee, which meets no less than quarterly,
consists of employees who are independent of the loan origination process and
members of management. This Committee reviews individual loans with the lending
officers and assesses risks relating to the collectibility of these loans. The
Asset Classification Committee determines the adequacy of the allowance for
possible loan losses through ongoing analysis of historical loss experience, the
composition of the loan portfolios, delinquency levels, underlying collateral
values and cash flow values. Utilizing these procedures, management believes
that the allowance at September 30, 1996 is sufficient to cover anticipated
losses inherent in the loan portfolios.

Activity in the allowance for possible loan losses is summarized as follows:

As of and For the
Year Ended September 30,
---------------------------------
1996 1995 1994
---------- -------- ---------
(In Thousands)

Allowance for possible loan losses,
beginning of year.......................... $21,272 $25,705 $26,828

Charge-offs:
Commercial real estate.................... (974) (2,889) (879)
Residential real estate................... (730) (1,422) (1,572)
Multifamily residential................... -- (546) (853)
Other loans............................... (1,441) (1,442) (901)
------- ------- -------
Total charge-offs........................ (3,145) (6,299) (4,205)
------- ------- -------
Less recoveries:
Commercial real estate................. -- -- 349
Residential real estate................ -- 4 47
Other loans............................ 59 75 36
------- ------- -------
Total recoveries..................... 59 79 432
------- ------- -------
Net charge-offs.................... (3,086) (6,220) (3,773)
Hamilton's net activity for the quarter
ended December 31, 1994.................... -- 87 --
Addition to allowance, charged to expense... 1,200 1,700 2,650
------- ------- -------
Allowance at end of year.................... $19,386 $21,272 $25,705
======= ======= =======

The Bank's allowance for possible loan losses at September 30, 1996 was $19.4
million which represented 75.9% of nonaccrual loans, or 1.0% of total loans,
compared to $21.3 million at September 30, 1995 which represented 70.0% of
nonaccrual loans, or 1.3% of total loans.

The following table sets forth information regarding nonaccrual loans, real
estate owned, and restructured loans at the dates indicated:

September 30,
-----------------------------
1996 1995 1994
------- ------- ------
(In Thousands)

Nonaccrual loans:
First mortgage loans:
One-to-four family conventional
residential............................ $12,092 $13,391 $14,642
Multifamily residential................. 155 131 1,966
Commercial real estate.................. 11,758 14,316 18,208
------- ------- -------
24,005 27,838 34,816
Other loans - cooperative residential
loans.................................... 1,547 2,534 1,717
------- ------- -------
Total nonaccrual loans................ $25,552 $30,372 $36,533
======= ======= =======
Real estate owned........................... $ 3,197 $ 1,967 $ 5,919
======= ======= =======
Restructured loans.......................... $ 5,818 $ 9,104 $ 9,481
======= ======= =======

At September 30, 1996, 1995 and 1994, total nonaccrual loans as a percentage of
total assets amounted to .87%, 1.11% and 1.42%, respectively. The decrease in
nonaccrual loans at September 30, 1996 reflects the Bank's increased collection
activity and the acceleration of write-offs of delinquent loans.

The amount of interest income on nonaccrual and restructured loans that would
have been recorded had these loans been current in accordance with their
original terms, was $3,252,000, $4,049,000 and $3,940,000 for the years ended
September 30, 1996, 1995 and 1994, respectively. The amount of interest income
that was recorded on these loans was $1,397,000, $1,808,000 and $1,181,000 for
the years ended September 30, 1996, 1995 and 1994, respectively.

NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES
Net interest income after provision for possible loan losses for the year ended
September 30, 1996 amounted to $99.5 million, representing an increase of $6.0
million, or 6.4%, from the year ended September 30, 1995. Net interest income
for the current year increased $5.5 million due to a $132.9 million increase in
average interest-earning assets and a 3 basis point increase in the net interest
margin. The provision for possible loan losses declined $.5 million, reflecting
the improvement in the Bank's level of nonaccrual loans.

NON-INTEREST INCOME
Non-interest income amounted to $14.7 million for the year ended September 30,
1996 as compared with $6.6 million for the year ended September 30, 1995. The
$8.1 million improvement in non-interest income is primarily attributable to a
$5.8 million improvement in net gain (loss) on the sale of mortgage loans and
securities available for sale, and a $2.0 million increase in banking related
fee income. The growth in banking related fee income primarily reflects an
increase in annuity sales and an increase in NSF fees from checking accounts.
Included in the current year's $4.8 million net gain on the sale of mortgage
loans and securities available for sale, is a gain of $2.9 million realized on
the sale of the Company's investment in the shares of another local savings
bank.

NON-INTEREST EXPENSE
Non-interest expense amounted to $57.4 million during the year ended September
30, 1996 as compared with $68.9 million during the year ended September 30,
1995. The current year includes the one-time SAIF recapitalization assessment of
$9.4 million, while the prior year includes $19.0 million in merger and
restructuring expenses incurred in connection with the merger with Hamilton.
Excluding these one-time charges in both periods, non-interest expense would
have been $48.0 million in fiscal year 1996 as compared to $49.9 million in the
prior fiscal year. This decline of $1.9 million is primarily attributable to
consolidation efficiencies from the merger which, however, were partially offset
by the cost associated with stock appreciation rights as a result of the 62%
increase in the price of the Company's stock during fiscal year 1996, coupled
with staffing and other costs associated with the Bank's newly formed
multifamily lending department and the Bank's continued efforts to expand into
supermarket banking.

INCOME TAX EXPENSE
Income taxes totaled $24.8 million for an effective tax rate of 43.6% during
fiscal year 1996 compared to $19.7 million for an effective tax rate of 63.0%
during fiscal year 1995. The higher effective income tax rate during the prior
year resulted from the non-deductibility of certain merger and restructuring
charges.

COMPARISON OF YEARS ENDED SEPTEMBER 30, 1995 AND SEPTEMBER 30, 1994

GENERAL
The Company's net income for the year ended September 30, 1995 was $11.6
million, or $.87 per share, as compared to $33.2 million, or $2.44 per share,
for the year ended September 30, 1994. Comments regarding the components of net
income are detailed in the following paragraphs.

INTEREST INCOME
Interest income on interest-earning assets for the year ended September 30, 1995
increased by $21.5 million, or 12.2%, to $197.0 million as compared with $175.5
million for the year ended September 30, 1994. The increase in interest income
was attributable to a $166.5 million increase in average interest-earning
assets, resulting primarily from an increase in mortgage loans, coupled with a
36 basis point increase in yield on interest-earning assets. The increase in
yield on interest-earning assets for the year ended September 30, 1995 resulted
from the increasing interest rate environment experienced in the second half of
fiscal year 1994 through the first half of fiscal year 1995. The second half of
fiscal year 1995 saw interest rates become more stable, and decline slightly.
This interest rate environment resulted in the upward repricing of adjustable
rate loans and the origination of new loans at higher rates.

Interest and fees on loans for the year ended September 30, 1995 increased by
$12.5 million, or 10.6%, to $130.0 million as compared to fiscal year 1994. The
increase in loan income reflects a $149.6 million increase in the average
balance and a 54 basis point increase in the yield on other loans which,
however, were partially offset by a 14 basis point decrease in the yield on
first mortgage loans. The increase in average balance reflects the purchase of
$114.7 million of loans, combined with increased originations. Interest on
mortgage-backed securities held to maturity and mortgage-backed securities
available for sale for the year ended September 30, 1995 increased by $7.8
million to $60.3 million as compared to fiscal year 1994. The increase in
mortgage-backed securities income reflects a 68 basis point increase in yield to
6.55%, coupled with a $26.3 million increase in the average balance of the
portfolio to $921.2 million. Interest and dividends on debt and equity
securities increased by$1.9 million for the year ended September 30, 1995 to
$4.9 million as compared to fiscal year 1994. The increase in interest and
dividends on debt and equity securities reflects a $29.3 million increase in the
average balance of the portfolio to $71.2 million, partially offset by a 26
basis point decline in the yield to 6.85%. Money market investment income
declined by $1.0 million to $1.1 million as compared to fiscal year 1994. The
decline in money market investment income reflects a $38.9 million decrease in
the average balance of the portfolio which, however, was partially offset by a
207 basis point increase in yield to 5.73%. Interest on trading account
securities for the year ended September 30, 1995 increased by $.3 million as
compared to fiscal year 1994. This increase was the result of a 206 basis point
increase in yield, coupled with a $.2 million increase in the average balance of
the portfolio.

INTEREST EXPENSE
Interest expense on interest-bearing liabilities for the year ended September
30, 1995 increased by $21.8 million, or 27.2%, to $101.7 million as compared
with $79.9 million for the year ended September 30, 1994. The increase in
interest expense reflects a $163.9 million increase in the average balance of
total interest-bearing liabilities to $2,427.8 million, coupled with a 66 basis
point increase in the cost of funds. The increase in the cost of
interest-bearing liabilities reflects the increased utilization of short-term
borrowed funds which reprice faster than deposit liabilities. The impact of the
Bank's use of interest rate swaps and other off-balance sheet instruments was to
decrease interest expense by $1.2 million for the year ended September 30, 1995
and increase interest expense by $1.5 million for the year ended September 30,
1994. Further, the impact of the Bank's use of reverse repurchase agreements
with imbedded interest rate caps, all of which had matured during fiscal year
1995, was to decrease interest expense by $1.6 million and $1.1 million for the
years ended September 30, 1995 and 1994, respectively.

Interest expense on deposits increased $5.4 million, or 9.5%, to $62.4 million
for the year ended September 30, 1995 as compared with the year ended September
30, 1994. This increase reflects a 37 basis point increase in the average cost
of deposits from 3.18% in fiscal year 1994 to 3.55% in fiscal year 1995 which
was attributable to both an increase in rates paid for deposits and a shifting
by depositors from lower costing passbook savings and money market accounts to
higher costing certificates of deposit. Interest expense on borrowed funds
increased $16.4 million, or 71.4%, to $39.3 million for the year ended September
30, 1995, as compared to the year ended September 30, 1994. This increase
reflects a $196.1 million increase in the average balance of borrowed funds to
$669.1 million, coupled with a 103 basis point increase in the average cost of
borrowed funds from 4.85% in fiscal year 1994 to 5.88% in fiscal year 1995.

PROVISION FOR POSSIBLE LOAN LOSSES
The Company provided $1.7 million and $2.7 million for possible loan losses
during the years ended September 30, 1995 and 1994, respectively. The reduction
in the provision for possible loan losses reflects the stabilization of the
Bank's ratio of its allowance for possible loan losses to total nonaccrual loans
which amounted to 70.0% and 70.4% at September 30, 1995 and 1994, respectively.

NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES
Net interest income after provision for possible loan losses for the year ended
September 30, 1995 amounted to $93.5 million, representing an increase of $.6
million, or .7%, from the year ended September 30, 1994. Net interest income for
the year ended September 30, 1995 declined $.3 million from the prior year,
which was more than offset by a $.9 million decline in the provision for
possible loan losses. The decline in net interest income resulted from a 27
basis point decline in the Bank's net interest margin, partially offset by a
$166.5 million increase in average interest-earning assets. The decline in net
interest margin resulted primarily from the increased reliance on short-term
borrowed funds which resulted in a greater upward repricing of the Bank's
interest-bearing liabilities versus interest-earning assets in connection with
the interest rate environment in fiscal year 1995 as compared to fiscal year
1994.

NON-INTEREST INCOME
Non-interest income amounted to $6.6 million for the year ended September 30,
1995 as compared with $8.0 million for the year ended September 30, 1994. The
$1.4 million decline in non-interest income is primarily attributable to a $1.2
million loss on the sale of securities available for sale incurred during the
second quarter of fiscal year 1995 related to the restructuring of the Hamilton
portfolio. Such restructuring and sale were completed in order to make the
acquired portfolio's risk profile more consistent with the Company's.

NON-INTEREST EXPENSE
Non-interest expense amounted to $68.9 million during the year ended September
30, 1995 as compared with $51.7 million during the year ended September 30,
1994. This increase of $17.2 million primarily reflects $19.0 million in merger
and restructuring expenses incurred in connection with the merger with Hamilton.
Compensation and benefits decreased $3.4 million primarily attributable to
consolidation efficiencies from the merger. Excluding the merger and
restructuring expenses, non-interest expense represented 1.90% of average assets
as compared to 2.10% in fiscal year 1994.

INCOME TAX EXPENSE
Income taxes totaled $19.7 million for an effective tax rate of 63.0% during
fiscal year 1995 compared to $21.7 million for an effective tax rate of 44.2%
during fiscal year 1994. The higher effective income tax rate during fiscal year
1995 resulted from the non-deductibility of certain merger and restructuring
charges.

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE -- INCOME TAXES
Prior to October 1, 1993, deferred income taxes were provided for timing
differences in the recognition of revenues and expenses for tax reporting and
financial statement purposes (an income statement approach), pursuant to
Accounting Principles Board Opinion No. 11.

On October 1, 1993, New York Bancorp adopted SFAS No. 109 which adopted a
balance sheet approach (or liability method) in place of the income statement
approach. The liability method requires that an asset or a liability, as
appropriate, be recorded for financial statement purposes for the deferred tax
consequences of all temporary differences between the tax basis and financial
statement carrying amounts of existing assets and liabilities, which is measured
by applying enacted tax laws and rates. Additionally, SFAS No. 109 permits the
recognition of net deferred tax assets based upon the likelihood of realization
of tax benefits in the future. The cumulative effect at October 1, 1993 of the
change in accounting for income taxes which was implemented on a prospective
basis amounted to $5.7 million for the year ended September 30, 1994.

ANALYSIS OF FINANCIAL CONDITION
In managing its financial condition, the Company establishes objectives to
maximize the appropriate levels of asset and liability mix to meet profit, risk
and capital goals. Total assets increased $209.3 million to $2.9 billion at
September 30, 1996. The increase in total assets primarily reflects a $188.2
million increase in loans receivable and a $69.3 million increase in debt and
equity securities which, however, were partially offset by a $40.3 million
decrease in mortgage-backed securities.

The growth in assets was primarily funded by a $241.6 million increase in
borrowed funds, as deposits decreased $32.9 million. Although the Bank's
strategy is to fund asset growth with core deposits, the Bank will also continue
to utilize borrowings to fund asset growth when such growth can be conducted
profitably within the Bank's asset/liability management parameters and
regulatory capital constraints.

As permitted under guidance issued by the Financial Accounting Standards Board
in November 1995, during the quarter ended December 31, 1995, the Company
transferred $84.1 million of its mortgage-backed securities and $15.0 million of
its debt securities, previously classified as held to maturity, to available for
sale. Additionally, mortgage-backed securities with a carrying value and market
value of approximately $15.4 million, previously classified as available for
sale, were transferred to the held to maturity portfolio.

Loans serviced for others at September 30, 1996 amounted to $597.0 million as
compared to $523.7 million at September 30, 1995.

LIQUIDITY AND CAPITAL
The Company's current primary sources of funds are dividends from the Bank and
sales of debt and equity securities available for sale. Dividend payments to the
Company from the Bank are subject to the profitability of the Bank, applicable
law and regulations, and provisions under terms of its subordinated capital note
agreements. During fiscal years 1996, 1995 and 1994, the Bank made dividend
payments to the Company amounting to $37.4 million, $26.2 million, and $11.9
million, respectively.

The Company's liquidity is also available for, among other things, payments of
dividends or treasury stock repurchases. In this regard, during fiscal years
1996, 1995 and 1994 the Company declared cash dividends of $9.2 million, $9.1
million, and $5.7 million, respectively, and made treasury stock repurchases of
$29.0 million, $28.8 million, and $4.5 million, respectively.

The maintenance of an appropriate level of liquid resources to meet not only
regulatory requirements but also to provide the funding necessary to meet the
institution's business activities and obligations is an integral element in the
successful management of the Company's assets. Federal regulations currently
require that for each calendar month, a savings institution maintain an average
daily balance of cash and cash equivalents and certain uncommitted marketable
securities equal to 5% of net withdrawable accounts and borrowings payable in
one year or less. Under Office of Thrift Supervision ("OTS") regulations, the
percentage of assets which must be liquid assets may vary between 4% and 10% of
the obligation of the savings institution on withdrawable accounts and
borrowings payable on demand or with unexpired maturities of one year or less.
During September 1996, the Bank's liquidity ratio was 5.26% compared to 5.28%
for the month of September 1995. The liquidity levels will vary dependent upon
savings flows, future loan fundings, operating needs and general prevailing
economic conditions. Because of the Bank's diverse available funding sources,
including cash flows from the Bank's regular amortization and interest received
in connection with the loan and mortgage-backed securities portfolios and
borrowings, available on a collateralized basis, the Company does not foresee
any problems in generating liquidity to meet its operational, debt repayment and
other requirements.

During fiscal 1996, the Company's operating activities provided $37.7 million.
These funds, along with $169.9 million provided by financing activities and
funds available at the beginning of the fiscal year, were utilized to fund net
investing activities of $229.0 million. Financing activities primarily provided
borrowings with original maturities greater than three months. Investing
activities were primarily focused on the origination and purchase of first
mortgage loans, which totaled $572.0 million. Funds were also provided by
principal payments on loans and securities, and from the sale of loans and
securities available for sale.

The primary investment activity of the Bank is the origination and purchase of
loans receivable, and the purchase of mortgage-backed securities and debt and
equity securities. During fiscal year 1996, the Bank originated $425.1 million
of loans and purchased $206.0 million of loans. Further, during fiscal year
1996, the Bank purchased $82.4 million of mortgage-backed securities and $142.0
million of debt and equity securities. These activities were primarily funded by
principal and interest payments on loans, mortgage-backed securities and debt
and equity securities, and from deposits, borrowings from the Federal Home Loan
Bank of New York ("FHLB-NY") and reverse repurchase agreements.

At September 30, 1996, the Bank continued to exceed all regulatory capital
requirements. Regulatory capital, which is comprised of "tangible capital,"
"core capital" and "risk-based capital," amounted to approximately $138.5
million, $138.5 million and $157.6 million, respectively, which exceeded the
respective regulatory requirements by $94.4 million, $50.2 million and $45.5
million. (See note 17 to Consolidated Financial Statements.)

IMPACT OF INFLATION AND CHANGING PRICES
The consolidated financial statements and accompanying notes presented herein
have been prepared in accordance with generally accepted accounting principles,
which require the measurement of financial position and operating results in
terms of historical dollars without considering the changes in the relative
purchasing power of money over time and due to inflation. Unlike most industrial
companies, nearly all the assets and liabilities of the Company are monetary. As
a result, interest rates have a greater impact on the Company's performance than
do the effects of general levels of inflation. Interest rates do not necessarily
move in the same direction or to the same extent as the price of goods and
services.

RECENT ACCOUNTING PRONOUNCEMENTS
In March 1995, the FASB issued Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-lived Assets and for Long-lived
Assets To Be Disposed Of" ("SFAS No. 121 "). The Statement is effective for
financial statements issued for fiscal years beginning after December 15, 1995.
The Statement establishes accounting standards for, among other things, the
impairment of long-lived assets. The Statement requires that long-lived assets
be reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The Company adopted
SFAS No. 121 on October 1, 1996. Adoption of SFAS No. 121 did not have a
significant effect on the Company's financial condition or results of
operations.

over the service period, which is usually the vesting period. The Company has
adopted SFAS No. 123 effective October 1, 1996, and has elected to remain with
the previous accounting standard which does not require the fair value method of
accounting. Proforma disclosures as if the fair value method were adopted will
be presented in future financial statements. Based on this method of adoption,
SFAS No. 123 will not have a significant effect on the Company's financial
condition or results of operations.

In June 1996, the FASB issued Statement of Financial Accounting Standards No.
125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" ("SFAS No. 125"). The Statement is effective for
transactions occurring after December 31, 1996. The Statement provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishments of liabilities. Those standards are based on
consistent application of a financial - components approach that focuses on
control. Under that approach, after a transfer of financial assets, an entity
recognizes the financial and servicing assets it controls and the liabilities it
has incurred, derecognizes financial assets when control has been surrendered,
and derecognizes liabilities when extinguished. This Statement provides
consistent standards for distinguishing transfers of financial assets that are
sales from transfers that are secured borrowings. Based on its review of the
Statement, management does not believe that adoption of SFAS No. 125 will have a
material effect on the Company.

RECAPITALIZATION OF THE SAIF
On September 30, 1996, Congress passed, and the President signed, legislation
that recapitalized the SAIF. Under the major provisions of the legislation,
savings institutions, such as the Bank, are being assessed a one-time assessment
of 65.7 basis points per $100 of insured SAIF-assessable deposits as of March
31, 1995. Since approximately 80.8% of the Bank's deposits are insured by the
SAIF (the remainder are insured by the Bank Insurance Fund ("BIF")), the Company
recorded a one-time charge of $9.4 million during the fourth quarter of fiscal
year 1996.

As a result, the disparity of insurance premiums between SAIF and BIF members
will be reduced. The FDIC has proposed that beginning January 1, 1997 deposit
insurance premiums for SAIF members will be reduced to the same schedule as BIF
members, ranging from 0 to 27 basis points rather than the previous range of 23
to 31 basis points. In addition, the FDIC has proposed that SAIF deposits will
have their assessment rate for deposit insurance lowered to 18 to 27 basis
points for the quarter ending December 31, 1996, the amount necessary to cover
Financing Corporation ("FICO") obligations. The FDIC has estimated that,
effective January 1, 1997, SAIF deposits will also be assessed 6.5 basis points,
and BIF deposits will be assessed 1.3 basis points, to cover the cost of FICO
obligations, until December 31, 1999. Full pro rata sharing of the FICO payments
between SAIF and BIF members will occur on the earlier of January 1, 2000 or the
date the SAIF and BIF are merged. The legislation specifies that the SAIF and
BIF will be merged on January 1, 1999 provided no savings associations remain as
of that time. As a result of this legislation, the Bank expects to see a
significant decrease in future deposit insurance premiums. However, management
cannot predict the level of FDIC insurance assessments on an on-going basis,
whether the savings association charter will be eliminated, or whether the SAIF
and BIF will eventually be merged.

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

Under the Small Business Job Protection Act of 1996 (the "1996 Act"), signed
into law in August, 1996, Section 593 of the Code was amended, and the Bank, as
a "large bank" (one with assets having an adjusted basis of more than $500
million), will be unable to make additions to its tax bad debt reserve, but will
be permitted to deduct bad debts only as they occur. Additionally, the law
required institutions to recapture (that is, take into taxable income) the
excess of the balance of its bad debt reserves as of December 31, 1995 over the
balance of such reserves as of December 31, 1987. As a result of its bad debt
reserves at December 31, 1995 equaling its bad debt reserves at December 31,
1987, the Bank will experience no recapture. The New York State tax law has been
amended to prevent a similar recapture provision of the Bank's bad debt reserve,
and to permit continued future use of the bad debt reserve methods, for purposes
of determining the Bank's New York State tax liability. However, no such
amendments have been made to date with respect to the New York City tax law;
therefore, the Company cannot predict whether such changes will be made or as to
the form of any changes. (See note 16 to Consolidated Financial Statements.)

New York Bancorp Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
- --------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

September 30,
----------------------
1996 1995
---------- --------

ASSETS
Cash and due from banks............................. $ 13,045 $31,189
Money market investments (note 3)................... 10,700 13,915
Trading account securities.......................... -- 2,003
Investment in debt and equity securities, net:
Held to maturity (estimated market value of
$641 and $21,107 at September 30, 1996
and 1995, respectively) - (notes 4 and 14)....... 643 21,179
Available for sale (note 5)....................... 136,133 46,273
Mortgage-backed securities, net:
Held to maturity (estimated market value of
$534,602 and $637,503 at September 30, 1996
and 1995, respectively) - (notes 6 and 14)....... 550,817 664,726
Available for sale (notes 7, 14 and 21)........... 280,429 206,794
Federal Home Loan Bank stock (note 14).............. 27,938 20,288
Loans receivable, net (notes 8, 9 and 14):
First mortgage loans.............................. 1,603,769 1,389,776
Other loans....................................... 268,779 296,439
---------- ---------
1,872,548 1,686,215
Less allowance for possible loan losses........... (19,386) (21,272)
---------- ---------
Total loans receivable, net...................... 1,853,162 1,664,943
Accrued interest receivable (note 10)............... 21,862 21,723
Premises and equipment, net (note 11)............... 12,927 12,851
Other assets (notes 12 and 16)...................... 33,251 25,708
---------- ---------
Total assets..................................... $2,940,907 $2,731,592
========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits (note 13)................................ $1,715,959 $1,748,874
Borrowed funds, including securities sold under
agreements to repurchase of $453,698 and $344,860
at September 30, 1996 and 1995, respectively
(note 14)........................................ 1,008,786 767,138
Mortgagors' escrow payments....................... 14,987 16,520
Accrued expenses and other liabilities
(notes 15 and 18)................................ 49,272 42,674
--------- ---------
Total liabilities................................ 2,789,004 2,575,206
---------- ---------
Commitments, contingencies and contracts
(notes 8, 16 and 20)
SHAREHOLDERS' EQUITY (NOTES 16, 17 AND 19):
Preferred stock, $.01 par value, 2,000,000 shares
authorized; none issued.......................... -- --
Common stock, $.01 par value, 30,000,000 shares
authorized; 14,746,850 shares issued at
September 30, 1996 and 1995;
11,098,800 and 12,138,974 shares outstanding
at September 30, 1996 and 1995, respectively.. 147 147
Additional paid-in capital........................ 65,503 63,575
Retained earnings, substantially restricted....... 145,686 125,593
Treasury stock, at cost, 3,648,050 and 2,607,876
shares at September 30, 1996 and 1995, respectively (58,871) (33,740)
Unrealized appreciation (depreciation) on securities
available for sale, net of tax effect............ (562) 811
---------- ----------
Total shareholders' equity....................... 151,903 156,386
---------- ----------
Total liabilities and shareholders' equity....... $2,940,907 $2,731,592
========== ==========

See accompanying notes to consolidated financial statements.

21
14

New York Bancorp Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Year Ended September 30,
---------------------------------------
1996 1995 1994
------- ------- -------

INTEREST INCOME:
Interest and fees on loans:
First mortgage loans................................... $ 118,792 $ 104,042 $ 93,373
Other loans............................................ 24,735 25,916 24,094
---------- ---------- ---------
Total interest and fees on loans...................... 143,527 129,958 117,467
Mortgage-backed securities.............................. 56,921 60,331 52,521
Debt and equity securities - taxable.................... 6,774 4,877 2,976
Money market investments................................ 256 1,080 2,113
Trading account securities.............................. 13 726 453
---------- ---------- ---------
Total interest income................................. 207,491 196,972 175,530
---------- ---------- ---------
INTEREST EXPENSE:
Deposits (notes 13 and 21).............................. 60,470 62,394 56,996
Borrowed funds (notes 14 and 21)........................ 46,276 39,336 22,952
---------- ---------- ---------
Total interest expense................................ 106,746 101,730 79,948
---------- ---------- ---------
Net interest income................................... 100,745 95,242 95,582
Provision for possible loan losses (note 9)............. (1,200) (1,700) (2,650)
---------- ---------- ---------
Net interest income after provision for
possible loan losses............................... 99,545 93,542 92,932
---------- ---------- ---------
NON-INTEREST INCOME:
Loan fees and service charges........................... 2,770 2,566 3,292
Net gain (loss) on the sales of mortgage loans and
securities available for sale (notes 5, 7 and 8) 4,750 (1,088) 214
Other................................................... 7,147 5,134 4,494
---------- ---------- ---------
Total non-interest income............................. 14,667 6,612 8,000
---------- ---------- ---------
NON-INTEREST EXPENSE:
General and administrative:
Compensation and benefits (notes 18 and 19)............ 22,741 21,809 25,197
Occupancy, net (notes 11 and 20)....................... 8,397 8,751 8,346
Advertising and promotion.............................. 2,565 2,565 2,370
Federal deposit insurance premiums..................... 3,759 4,464 4,756
Other.................................................. 10,073 11,379 10,176
---------- ---------- ---------
Total general and administrative...................... 47,535 48,968 50,845
Merger and restructuring (note 2)....................... -- 19,024 --
Real estate operations, net (note 12)................... 463 883 880
SAIF recapitalization (note 13)......................... 9,432 -- --
---------- ---------- ---------
Total non-interest expense............................ 57,430 68,875 51,725
---------- ---------- ---------
Income before income tax expense and
cumulative effect of change in
accounting principle................................ 56,782 31,279 49,207
---------- ---------- ---------
INCOME TAX EXPENSE (NOTE 16):
Federal expense......................................... 16,676 13,460 14,214
State and local expense................................. 8,100 6,257 7,526
---------- ---------- ---------
Total income tax expense.............................. 24,776 19,717 21,740
---------- ---------- ---------
Income before cumulative effect
of change in accounting principle.................... 32,006 11,562 27,467
Cumulative effect of change in accounting
for income taxes........................................ -- -- 5,685
---------- ---------- ---------
Net income............................................ $ 32,006 $ 11,562 $ 33,152
========== ========== =========
EARNINGS PER COMMON SHARE (NOTE 17):
Income before cumulative effect of change in............
accounting principle................................... $ 2.68 $ .87 $ 2.02
Cumulative effect of change in accounting for
income taxes........................................... $ .-- $ .-- $ .42
Net income............................................ $ 2.68 $ .87 $ 2.44
See accompanying notes to consolidated financial statements.

New York Bancorp Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------
(Dollars in thousands, except per share data)

Unrealized
Common Appreciation
Common Stock (Depreciation)
Additional Stock Acquired on Securities
Common Paid-in Retained Treasury Acquired by Available
Stock Capital Earnings Stock by ESOP RRP for Sale Total
------ --------- -------- -------- ------- --------- ------------ --------

Balance at September 30, 1993......... $144 $ 53,854 $111,160 $(7,194) $(2,717) $(1,478) $ -- $153,769

Net income for the year ended
September 30, 1994................... -- -- 33,152 -- -- -- -- 33,152
Dividends declared on common stock.... -- -- (5,720) -- -- -- -- (5,720)
Distribution of 10% stock dividend.... 7 12,133 (12,140) -- -- -- -- --
Cash paid in lieu of 221
fractional shares in the aggregate,
resulting from stock dividend........ -- (3) -- -- -- -- -- (3)
Compensation amortized to expense -- 600 -- -- 543 348 -- 1,491
Purchase of 339,280 shares of
treasury stock....................... -- -- -- (4,544) -- -- -- (4,544)
Purchase and retire 283,030 shares.... (4) (3,772) -- -- -- -- -- (3,776)
Exercise of 92,791 shares of
stock options........................ -- -- (924) 1,743 -- -- -- 819
Unrealized appreciation on securities
available for sale at October 1,
1993, net of taxes of $377........... -- -- -- -- -- -- 449 449
Change in unrealized depreciation
on securities available for
sale, net of taxes of $3,428......... -- -- -- -- -- -- (4,346) (4,346)
---- --------- -------- ------- ------- ------- ------------ --------

Balance at September 30, 1994......... 147 62,812 125,528 (9,995) (2,174) (1,130) (3,897) 171,291

Net income for the year
ended September 30, 1995............. -- -- 11,562 -- -- -- -- 11,562
Dividends declared on common stock.... -- -- (9,114) -- -- -- -- (9,114)
Exercise of 385,464 shares of
stock options........................ 3 -- (603) 1,544 -- -- -- 944
Purchase of 1,453,016 shares of
treasury stock....................... -- -- -- (28,784) -- -- -- (28,784)
Purchase and retire 196,643 shares.... (2) (3,710) -- -- -- -- -- (3,712)
Net proceeds from sale of 298,375
shares of treasury stock (note 2).... -- 1,035 -- 3,495 -- -- -- 4,530
ESOP and RRP activity,
including tax benefit (note 2)....... (1) 3,438 -- -- 2,174 1,130 -- 6,741
Hamilton Bancorp's net income
for the three months ended
December 31, 1994 (note 2)........... -- -- (1,780) -- -- -- -- (1,780)
Change in unrealized appreciation
on securities available for sale,
net of taxes of $3,690............... -- -- -- -- -- -- 4,708 4,708
---- --------- -------- ------- ------- ------- ------------ --------

Balance at September 30, 1995......... 147 63,575 125,593 (33,740) -- -- 811 156,386

Net income for the year
ended September 30, 1996............. -- -- 32,006 -- -- -- -- 32,006
Dividends declared on common stock -- -- (9,218) -- -- -- -- (9,218)
Exercise of 174,038 shares of
stock options........................ -- 1,928 (2,695) 3,897 -- -- -- 3,130
Purchase of 1,214,212 shares of
treasury stock....................... -- -- -- (29,028) -- -- -- (29,028)
Unrealized depreciation on securities
transferred from held to maturity to
available for sale, net of taxes
of $97 (notes 4 and 6)............... -- -- -- -- -- -- (126) (126)
Change in unrealized appreciation
(depreciation) on securities available
for sale, net of taxes of $968....... -- -- -- -- -- -- (1,247) (1,247)
---- --------- -------- -------- ------- ------- ------------ --------

Balance at September 30, 1996......... $147 $ 65,503 $145,686 $(58,871) $ -- $ -- $ (562) $151,903
==== ======== ======== ======== ======= ======= ============ ========

See accompanying notes to consolidated financial statements.

New York Bancorp Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
(In thousands)

Year Ended September 30,
-----------------------------------------------
1996 1995 1994
-----------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income before cumulative effect of change in
accounting principle............................... $ 32,006 $ 11,562 $ 27,467
Cumulative effect of change in accounting
for income taxes................................... -- -- 5,685
---------- ---------- ---------
Net income.......................................... 32,006 11,562 33,152
---------- ---------- ---------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization...................... 2,153 2,064 1,817
Amortization and accretion of deferred fees,
discounts and premiums............................ 1,823 1,538 8,414
Provision for possible loan losses................. 1,200 1,700 2,650
Provision for losses on foreclosed real estate..... 346 361 --
Net (gain) loss on sale of foreclosed real estate.. 147 82 (190)
Net (gain) loss on sale of mortgage loans and
securities available for sale..................... (4,750) 1,088 (214)
SAIF recapitalization.............................. 9,432 -- --
Deferred income taxes.............................. (3,520) (1,965) (6,832)
Amortization of ESOP and RRP compensation
expense........................................... -- 464 1,491
Termination of ESOP and RRP........................ -- 4,992 --
Net (increase) decrease in trading account......... 2,003 10,936 (452)
Increase in accrued interest receivable............ (139) (2,579) (5,446)
Increase in accrued interest payable............... 1,476 838 1,161
Increase (decrease) in accrued expenses and
other liabilities................................. (6,290) 3,779 (1,981)
(Increase) decrease in other assets................ 1,806 2,812 (491)
---------- --------- ---------
Total adjustments.................................. 5,687 26,110 (73)
---------- --------- ---------
Net cash provided by operating activities........... 37,693 37,672 33,079
---------- --------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
Principal payments on loans......................... 296,727 201,852 211,300
Principal payments on mortgage-backed securities.... 102,091 80,169 350,694
Principal payments, maturities and calls
on debt and equity securities...................... 56,938 30,987 1,477
Proceeds on sales of loans.......................... 76,349 38,799 109,063
Proceeds on sales of mortgage-backed securities
available for sale................................. 83,766 77,279 39,058
Proceeds on sales of debt and equity securities
available for sale................................. 17,083 7,737 181
Investment in first mortgage loans.................. (571,989) (432,050) (341,555)
Investment in other loans........................... (59,045) (71,057) (49,798)
Investment in mortgage-backed securities
available for sale................................. (82,445) (45,789) (80,978)
Investment in mortgage-backed securities
held to maturity................................... -- -- (589,083)
Investment in debt and equity securities
available for sale................................. (142,048) (52,221) (135)
Investment in debt securities held to maturity...... -- -- (49,985)
Investment in interest rate collar and floor
agreements........................................ (915) (2,265) --
Proceeds on sales of foreclosed real estate......... 2,856 8,035 3,896
Proceeds from sale of interest rate floor and interest
rate swap agreements............................... 1,512 10,835 --
Purchases of Federal Home Loan Bank stock, net...... (7,650) (2,879) 4,325
Net purchases of premises and equipment............. (2,229) (1,374) (2,466)
---------- --------- ----------
Net cash used in investing activities............... (228,999) (151,942) (394,006)
---------- --------- ----------
(Continued)

24
17

Year Ended September 30,
-----------------------------------------
1996 1995 1994
-----------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in non-interest bearing
demand, savings, money market,
and NOW accounts.................................... $ 14,341 $ (187,214) $ (56,591)
Net increase (decrease) in time deposits (47,256) 152,542 90,003
Net increase (decrease) in borrowings with original
maturities of three months or less.................. (93,936) 248,715 160,304
Proceeds from long-term borrowings................... 691,459 10,000 200,000
Repayment of long-term borrowings.................... (355,875) (66,517) (75,100)
Purchase of common stock for treasury
or retirement....................................... (29,028) (32,496) (8,320)
Payment of common stock dividends.................... (9,427) (8,156) (5,582)
Exercise of stock options............................ 1,202 872 819
Proceeds from sale of treasury stock................. -- 4,530 --
Cash paid in lieu of fractional shares
resulting from stock dividend....................... -- -- (3)
Increase (decrease) in mortgagors' escrow accounts (1,533) 1,004 (810)
------------ ---------- ------------
Net cash provided by financing activities............ 169,947 123,280 304,720
------------ ---------- ------------
Net increase (decrease) in cash and cash equivalents. (21,359) 9,010 (56,207)
Hamilton's net cash flows for the three months ended
December 31, 1994 (note 2).......................... -- (5,771) --
Cash and cash equivalents at beginning of year....... 45,104 41,865 98,072
------------ ------------ ------------
Cash and cash equivalents at end of year............. $ 23,745 $ 45,104 $ 41,865
============ ============ ============

SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid........................................ $ 108,096 $ 99,797 $ 78,908
========= ========= =========
Income taxes paid.................................... $ 26,328 $ 20,599 $ 23,992
========= ========= =========

Noncash Investing and Financing Activities:
Transfer of loans to real estate owned.............. $ 4,462 $ 4,455 $ 5,784
========= ======== =========
Transfer of mortgage-backed securities available
for sale to mortgage-backed securities
held to maturity (note 6).......................... $ 15,421 $ -- $ 71,492
========= ======== =========
Transfer of mortgage-backed securities held
to maturity to mortgage-backed securities
available for sale (notes 2 and 6)................. $ 84,109 $ 69,817 $ 78,067
========= ======== =========
Securitization and transfer of loans to
mortgage-backed securities available for sale...... $ 65,364 $ 11,418 $ 18,817
========= ======== =========
Transfer of debt securities held
to maturity to debt and equity securities
available for sale (notes 2 and 4)................. $ 15,000 $ 7,465 $ --
========= ======== =========

See accompanying notes to consolidated financial statements.

New York Bancorp Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
September 30, 1996, 1995 and 1994

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
New York Bancorp Inc. ("New York Bancorp" or the "Holding Company") is a savings
and loan holding company under the savings and loan holding company act, as
amended ("SLHCA"). The Holding Company, through its savings bank subsidiary,
Home Federal Savings Bank (the "Bank") operates as a community savings bank. On
January 27, 1995, Hamilton Bancorp, Inc. ("Hamilton"), the parent company of
Hamilton Federal Savings F.A. ("Hamilton Savings"), was merged with and into New
York Bancorp (see note 2) and Hamilton Savings was merged into the Bank. The
merger was accounted for as a pooling of interests and, accordingly, all prior
periods include the consolidated accounts of Hamilton. The more significant
accounting and reporting policies are summarized below.

(A) PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The accompanying consolidated financial statements are prepared on the accrual
basis of accounting and include the accounts of New York Bancorp and its wholly
owned subsidiary, Home Federal Savings Bank (collectively the "Company"). All
material intercompany transactions and balances have been eliminated.

The Company reports its financial results on a fiscal year basis ending
September 30, whereas Hamilton had reported its financial results on a calendar
year basis. The consolidated financial statements for fiscal year 1995 reflect
Hamilton's year-end conformed with that of the Company. The consolidated
financial statements for fiscal year 1994 reflect the combination of the Company
at and for the year ended September 30 with Hamilton at or for its year ended
December 31.

In preparing the consolidated financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the consolidated statements of condition and
income for the years presented. Estimates that are susceptible to change
include, among other things, the determination of the allowance for possible
loan losses and the valuation of real estate acquired in connection with
foreclosures. Certain reclassifications have been made to prior year amounts to
conform to the current year presentation.

For purposes of reporting cash flows, cash and cash equivalents include cash and
due from banks and money market investments.

(B) MONEY MARKET INVESTMENTS
Money market investments represent short-term instruments (generally ninety days
or less), which are generally held to maturity. These investments are carried at
cost or, if applicable, at cost adjusted for accretion of discount or
amortization of premium using a method which approximates the level-yield method
over the period to maturity. Carrying values of these investments approximate
current market values.

(C) TRADING ACCOUNT SECURITIES
Trading account securities are carried at estimated market value. Net realized
and unrealized gains (losses) are included in non-interest income. Interest on
trading account securities is included in interest income.

(D) DEBT AND EQUITY AND MORTGAGE-BACKED SECURITIES
Debt and mortgage-backed securities which the Company has the positive intent
and ability to hold until maturity are carried at cost, adjusted for
amortization of premiums and accretion of discounts on a level yield method.
Debt and mortgage-backed securities to be held for indefinite periods of time
and not intended to be held to maturity and marketable equity securities are
classified as available for sale securities and are recorded at fair value, with
unrealized appreciation and depreciation, net of tax, reported as a separate
component of shareholders' equity.

Gains and losses on the sale of securities are determined using the specific
identification method.

(E) LOANS RECEIVABLE
Loans are carried at amortized cost. Interest on loans is recognized on the
accrual basis. The accrual of income on loans is discontinued when certain
factors, such as contractual delinquency of ninety days or more, indicate
reasonable doubt as to the timely collectibility of such income. Interest
previously recognized on past due loans is charged to the allowance for loan
losses when in the opinion of management such interest is deemed to be
uncollectible. Loans on which the accrual of income has been discontinued are
designated as nonaccrual loans and income is recognized subsequently only in the
period collected.

Loan origination fees, less certain direct origination costs, are deferred and
recognized as an adjustment of the loan's yield over the life of the loan by the
interest method, which results in a constant rate of return. When loans are
sold, any remaining unaccreted deferred fees are recognized as income at the
time of sale.

Discounts (premiums) on mortgage loans purchased are deferred and accreted
(amortized) to income over the life of the loans using the level-yield method.

On October 1, 1995, the Company adopted Statement of Financial Accounting
Standards No. 114, "Accounting by Creditors for Impairment of a Loan" ("SFAS No.
114") and Statement of Financial Accounting Standards No. 118, "Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosures" ("SFAS
No. 118") which amended SFAS No. 114 (collectively the "Statements"). Under the
Statements, a loan is considered impaired when it is probable that the Company,
based upon current information, will not collect all amounts due, both principal
and interest, according to the contractual terms of the loan agreement. Certain
loans are exempt from the provisions of the Statements, including large groups
of smaller-balance homogenous loans that are collectively evaluated for
impairment which, for the Company, include one-to-four family first mortgage

loans and consumer and commercial loans whose principal balance is less than
$500,000, other than those modified in a troubled debt restructuring (TDR). A
loan is considered a TDR by the Company when modifications of a concessionary
nature are made to the loan's original contractual terms due to the borrower's
financial difficulties. The Statements require that impaired loans that are
within the scope of these Statements be measured based on the present value of
expected future cash flows discounted at the loan's effective interest rate or,
as a practical expedient, at the loan's observable market price or the fair
value of the collateral if the loan is collateral dependent.

Loans reviewed for impairment by the Company are limited to one-to-four family
first mortgage loans and consumer and commercial loans in excess of $500,000,
loans modified in a TDR, and commercial real estate loans. At September 30,
1996, the measurement value of the Company's impaired loans was based upon the
estimated market value of the underlying collateral. The Company's impaired loan
identification and measurement processes are conducted in conjunction with the
Company's review of classified assets and adequacy of its allowance for possible
loan losses. Specific factors utilized in the impaired loan identification
process include, but are not limited to, delinquency status, loan-to-value
ratio, and debt coverage. Cash receipts on an impaired loan are applied to
principal and interest in accordance with the contractual terms of the loan
unless full payment of principal is not expected, in which case the full payment
is applied as a reduction of the carrying value of the loan. If the estimated
market value of the underlying collateral, including guarantees, is less than
the principal balance of an impaired loan, a loss is either charged to the
allowance for possible loan losses or an impairment reserve is allocated to
reduce the book value of the loan to the estimated market value of the
underlying collateral.

Interest income on impaired loans is recorded on a cash basis, except for a TDR
which has performed under its restructured terms for at least six months, at
which time the accrual basis is utilized.

The adoption of SFAS Nos. 114 and 118 did not have a significant effect on the
Company's financial condition or results of operations.

Provisions for possible loan losses are charged to operations based on
management's periodic review and evaluation of the loan portfolio in relation to
the Company's past loan loss experience, known and inherent risks in the
portfolio, adverse situations which may affect the borrower's ability to repay,
overall portfolio quality, and underlying collateral values and cash flow
values. In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the Bank's allowance for possible loan
losses. Such agencies could require the Bank to recognize additions to the
allowance based on their judgments about information available to them at the
time of their examination. Management believes that the allowance for possible
loan losses is adequate.

(F) LOAN SERVICING
Fees earned for servicing loans owned by investors are reported as income when
the related mortgage loan payments are collected. Loan servicing costs are
charged to expense as incurred.

On October 1, 1995, the Company adopted Statement of Financial Accounting
Standards No. 122, "Accounting for Mortgage Servicing Rights" ("SFAS No. 122").
The Statement establishes accounting standards for mortgage servicing rights,
which are the contractual right to service loans owned by others, typically for
a fee. Prior to this Statement, only purchased mortgage servicing rights were
capitalized as an asset. SFAS No. 122 requires originated mortgage servicing
rights ("OMSR") to be capitalized as an asset. OMSR represents mortgage
servicing rights acquired when an institution originates and subsequently sells
or securitizes mortgage loans but retains the servicing rights. The Statement
also requires all capitalized mortgage servicing rights ("MSR") to be evaluated
for impairment based on their value. In evaluating for impairment, the Company
stratifies its MSR by adjustable or fixed rate loans, by interest rate, and by
year of origination. The Company uses current market assumptions for prepayment
speeds and discounts, and a 4.5% annual inflation factor for servicing costs.
The adoption of SFAS No. 122 did not have a significant effect on the Company's
operating results or financial position.

The Company amortizes its MSR in proportion to, and over the period of,
estimated servicing income.

(G) PREMISES AND EQUIPMENT
Land is carried at cost. Buildings and building improvements, leasehold
improvements and furniture, fixtures and equipment are carried at cost, less
accumulated depreciation and amortization. Buildings, building improvements and
furniture, fixtures and equipment are depreciated using the straight-line method
over the estimated useful lives of the respective assets. Leasehold improvements
are amortized using the straight-line method over the terms of the related
leases.

(H) REAL ESTATE OWNED
Real estate owned consists of real estate acquired in satisfaction of loans, and
is carried at the lower of cost or estimated fair value less estimated selling
costs. When a property is acquired in satisfaction of a loan, the excess of the
carrying amount over the fair value, if any, is charged to the allowance for
loan losses. Subsequent to acquisition, an allowance for real estate owned is
established to maintain these properties at the lower of cost or fair value less
estimated costs to sell. Real estate owned is shown net of the allowance.

The allowance is established through charges to income which are included in
real estate operations, net. Operating results of real estate owned, including
rental income, operating expenses, and gains and losses realized from the sales
of properties owned, are also recorded in real estate operations, net.

New York Bancorp Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
September 30, 1996, 1995 and 1994

(I) REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements are accounted for as financing transactions.
Accordingly, the collateral securities continue to be carried as assets and a
borrowing liability is established for the transaction proceeds.

(J) INCOME TAXES
The Holding Company and its subsidiary file consolidated income tax returns. The
subsidiary pays to or receives from the Holding Company, as appropriate, an
allocated portion of the consolidated income taxes or benefits based upon the
effective current income tax rate.

Deferred taxes are provided for temporary differences between the tax basis and
financial statement carrying amounts of existing assets and liabilities, which
is measured by applying enacted tax laws and rates. A valuation allowance is
provided for deferred tax assets which are deemed not likely to be realized.

(K) RETIREMENT PLANS
The Company has a pension plan covering substantially all employees who have
attained minimum service requirements. The Company's policy is to contribute
annually an amount sufficient to meet Employee Retirement Income Security Act
("ERISA") funding standards.

Postretirement and postemployment benefits are recorded on an accrual basis with
an annual provision that recognizes the expense over the service life of the
employee, determined on an actuarial basis.

(L) OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
Interest rate swaps, caps, floors, collars, options and financial futures
agreements are periodically used to manage the Company's interest rate risk.
Generally, the net settlements on such transactions used as hedges of
non-trading assets or liabilities are accrued as an adjustment to interest
income or interest expense over the lives of the agreements. Further, gains or
losses on terminated contracts used as hedges of non-trading assets or
liabilities are generally deferred and amortized over the life of the original
hedge. Contracts which are not matched against specific assets, liabilities, or
the repricing of interest rate floor arrangements or do not meet correlation
criteria are accounted for at market value with the resulting gain or loss
recognized in operations.

(M) EARNINGS PER COMMON SHARE
Earnings per common share is computed by dividing net income by the weighted
average number of shares of common stock and common stock equivalents
outstanding. The weighted average number of shares of common stock and common
stock equivalents used in the computation of earnings per common share for the
years ended September 30, 1996, 1995 and 1994 was 11,944,393, 13,327,915 and
13,609,867 respectively.

(2) BUSINESS COMBINATION
On January 27, 1995, New York Bancorp acquired Hamilton in a transaction
accounted for under the pooling of interests method of accounting. Pursuant to
the merger agreement, New York Bancorp issued 1.705 shares of common stock for
each outstanding share of Hamilton common stock and reserved for issuance
182,824 shares of common stock for Hamilton's stock options outstanding as of
the merger consummation date. In addition, 306,392 shares of common stock were
issued to holders of Hamilton stock options who received stock for the options
calculated in accordance with the formula contained in the merger agreement. As
a condition to the merger, Hamilton, immediately prior to the consummation of
the merger, reissued in an underwritten offering 175,000 shares of Hamilton
treasury stock amounting to net proceeds of $4,530,000, after underwriting
commission and offering costs. As a result of the above, 6,224,921 shares of
common stock were issued in connection with the merger.

The Company reports its financial results on a fiscal year basis ending
September 30, whereas Hamilton had reported its financial results on a calendar
year basis. Accordingly, the accompanying Consolidated Statements of Income,
Changes in Shareholders' Equity and Cash Flows for the year ended September 30,
1994 includes the operations of Hamilton for its year ended December 31, 1994.
The consolidated financial statements for 1995 reflect Hamilton's year-end
conformed with that of the Company. The effect on the accompanying consolidated
financial statements arising from the inclusion of the $1,780,000 of net income
of Hamilton for the three months ended December 31, 1994 in the Company's
results of operations for both fiscal year 1995 and 1994 is presented in the
accompanying Consolidated Statement of Changes in Shareholders' Equity as an
adjustment for change in fiscal year of Hamilton. Additionally, the accompanying
Consolidated Statements of Income for both fiscal year 1995 and 1994 each
include $7,948,000 and $1,780,000 representing net interest income after
provision for possible loan losses and net income, respectively, reflecting
those results of Hamilton's operations for the three months ended December 31,
1994.

The following is a summary of Hamilton Bancorp's cash flows for the three months
ended December 31, 1994 (in thousands):

Net cash provided by operating activities..................... $ 678
Net cash used by investing activities......................... (4,389)
Net cash provided by financing activities..................... 9,482
-------
Net increase in cash and cash equivalents..................... $ 5,771
=======

In connection with the merger, during fiscal year 1995 the Company recorded
certain non-recurring merger-related and restructuring expenses of approximately
$19.0 million and reclassified $77.3 million of Hamilton's held to maturity
securities to available for sale securities. Of these securities, $66.8 million
were subsequently sold, resulting in a $1.2 million loss. The non-recurring
merger-related and restructuring

charges reflected $4.3 million in investment banking, legal and accounting fees,
$6.3 million in severance costs, $5.1 million related to the termination of
Hamilton's ESOP and the accelerated vesting of shares of the RRP pursuant to the
requirements of such plans upon a change in control, and $3.3 million in certain
back-office and facilities consolidation costs and signage costs.

The following table summarizes the activity with respect to the merger-related
and restructuring expenses, on a pre-tax basis:

Merger-Related
and
Restructuring
Accrual
==============
(In Thousands)

Balance at December 31, 1994.................................. $ --
Provision charged against operations.......................... 19,024
Cash outlays.................................................. (12,287)
Non-cash items................................................ (6,395)
---------
Balance at September 30, 1995................................. 342
Cash outlays.................................................. (342)
---------
Balance at September 30, 1996................................. $ --
=========

(3) MONEY MARKET INVESTMENTS

Money market investments are summarized as follows:

September 30,
--------------------------
1996 1995
========== =========
(In Thousands)

Securities purchased under agreements to resell.......... $ 10,700 $ 8,400
FHLB overnight deposits.................................. -- 4,997
Federal funds sold....................................... -- 500
Other.................................................... -- 18
--------- --------
$ 10,700 $ 13,915
========= ========

During the years ended September 30, 1996, 1995 and 1994, the Company entered
into purchases of securities under agreements to resell. The amounts advanced
under these agreements represented short-term loans and are reflected as money
market investments in the consolidated statements of financial condition.
Securities representing collateral for these transactions were delivered by
appropriate entry into the Company's account maintained at a third-party
custodian. At September 30, 1996 and 1995, these agreements matured within
thirty days. Securities purchased under agreements to resell averaged $.3
million, $1.2 million and $16.2 million for the years ended September 30, 1996,
1995 and 1994, respectively. The maximum amount of such agreements outstanding
at any month-end during the years ended September 30, 1996, 1995 and 1994 was
$11.4 million, $8.4 million and $30.0 million, respectively.

(4) DEBT SECURITIES HELD TO MATURITY
The amortized cost and estimated market values of debt securities held to
maturity are summarized as follows:

September 30, 1996
------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- -----------
(In Thousands)

BONDS AND NOTES - corporate notes......... $ 643 $ -- $ (2) $ 641
========= ========== ========== ===========

September 30, 1995
-------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ------------ --------- ----------
(In Thousands)
NOTES:

BONDS AND NOTES:
U.S. Government and Agency Obligations.. $20,000 $ -- $ (75) $19,925
Corporate notes......................... 1,179 5 (2) 1,182
------- ------- ------- -------
Total................................... $21,179 $ 5 $ (77) $21,107
======= ======= ======= =======

The amortized cost and contractual maturity of debt securities at September 30,
1996 and 1995 are shown below. Expected maturities may differ from contractual
maturities because borrowers have the right to call or prepay obligations
without call or prepayment penalties.

September 30,
--------------------------------------------------
1996 1995
----------------------- ---------------------
Estimated Estimated
Amortized Market Amortized Market
Cost Value Cost Value
--------- --------- --------- ---------
(In Thousands)

Due in one year or less.................. $ -- $ -- $ 502 $ 507
Due after one year through five years.... -- -- 20,000 19,925
Due after five years through ten years... -- -- -- --
Due after ten years...................... 643 641 677 675
--------- --------- --------- ---------
Total.................................... $ 643 $ 641 $ 21,179 $ 21,107
========= ========= ========= =========

There were no sales of debt securities held to maturity during the years ended
September 30, 1996, 1995 and 1994. (See note 2 regarding the transfer of
securities in connection with the Hamilton merger.)

As permitted under guidance issued by the Financial Accounting Standards Board
in November 1995, during the quarter ended December 31, 1995, the Company
transferred $15.0 million of its debt securities, previously classified as held
to maturity, to the available for sale classification.

(5) DEBT AND EQUITY SECURITIES AVAILABLE FOR SALE
The amortized cost and estimated market values of debt and equity securities
available for sale are summarized as follows:

SEPTEMBER 30, 1996
--------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
========= ========== ========== =========
(In Thousands)

EQUITY SECURITIES:
Common stocks........................... $ 5,326 $ -- $ (508) $ 4,818
Stock in FNMA........................... 2 40 -- 42
--------- ---------- ---------- ---------
5,328 40 (508) 4,860
--------- ---------- ---------- ---------

BONDS AND NOTES:
U.S. Government and Agency obligations 131,245 -- (1,007) 130,238
Other.................................. 1,028 7 -- 1,035
--------- ---------- ---------- ---------
132,273 7 (1,007) 131,273
--------- ---------- ---------- ---------
$ 137,601 $ 47 $ (1,515) $ 136,133
========= ========== ========== =========

September 30, 1995
--------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
=========== ========== ========== ==========
(In Thousands)

EQUITY SECURITIES:
Common stocks............................. $ 4,082 $ 407 $ -- $ 4,489
Stock in FNMA............................. 2 29 -- 31
--------- -------- -------- --------
4,084 436 -- 4,520

BONDS AND NOTES -
U.S. Government and Agency obligations... 41,740 13 -- 41,753
--------- -------- -------- --------
$ 45,824 $ 449 $ -- $ 46,273
========= ======== ======== ========

Gains and losses were realized on sales of debt and equity securities available
for sale as follows:

Year ended September 30,
--------------------------------
1996 1995 1994
-------- ---------- ---------
(In Thousands)

Gross gains............................................... $ 3,143 $ 304 $ --
Gross losses.............................................. (2) (168) (3)
------ --------- --------
Net gains (losses)........................................ $ 3,141 $ 136 $ (3)
======= ========= ========

(6) MORTGAGE-BACKED SECURITIES HELD TO MATURITY
The amortized cost and the estimated market values of mortgage-backed securities
held to maturity are summarized as follows:

September 30, 1996
----------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ---------
(In Thousands)

FHLMC................................ $ 14,710 $ -- $ (59) $ 14,651
FNMA................................. 6,333 -- (129) 6,204
GNMA................................. 1,409 59 -- 1,468
Private-issue pass-through........... 1,264 25 -- 1,289
REMIC & CMO.......................... 527,101 -- (16,111) 510,990
-------- ---------- ---------- --------
Total................................ $550,817 $ 84 $ (16,299) $534,602
======== ========== ========== ========

September 30, 1995
-----------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ---------
(In Thousands)

FHLMC.............................. $ 21,858 $ 100 $ (137) $ 21,821
FNMA............................... 35,662 20 (618) 35,064
REMIC & CMO........................ 607,206 532 (27,120) 580,618
--------- ---------- --------- --------
Total.............................. $ 664,726 $ 652 $ (27,875) $637,503
========= ========== ========= ========

The amortized cost and estimated market values of mortgage-backed securities
held to maturity, all of which have prepayment provisions, are distributed to a
maturity category based on the estimated average life as shown below. These
principal prepayments are not scheduled over the life of the investment, but are
reflected as adjustments to the final maturity distribution.

September 30,
----------------------------
1996
----------------------------
Estimated
Amortized Market
Losses Value
------------ ---------
(In Thousands)

Due in one year or less..................................... $ 24,919 $ 24,735
Due after one year through five years....................... 236,722 233,632
Due after five years through ten years...................... 248,864 238,583
Due after ten years......................................... 40,312 37,652
--------- --------
$ 550,817 $534,602
========= ========

There were no sales of mortgage-backed securities held to maturity during the
years ended September 30, 1996, 1995 and 1994. (See note 2 regarding the
transfer of securities in connection with the Hamilton merger.)

In connection with the adoption of SFAS No. 115, effective October 1, 1993,
mortgage-backed securities previously classified as held for sale, and carried
at the lower of cost or market, were classified as available for sale. The
carrying value of these mortgage-backed securities was adjusted to their market
value, which resulted in increasing the carrying value by $826,000, and
increasing shareholders' equity by $449,000, which was net of taxes of $377,000.
In addition, the Bank reclassified $71.5 million of mortgage-backed securities
available for sale to mortgage-backed securities held to maturity, and
reclassified $78.1 million of mortgage-backed securities held to maturity to
mortgage-backed securities available for sale. At the time of the
reclassifications, the carrying value of such mortgage-backed securities
approximated market value.

As permitted under guidance issued by the Financial Accounting Standards Board
in November 1995, during the quarter ended December 31, 1995, the Company
transferred $84.1 million of its mortgage-backed securities previously
classified as held to maturity to the available for sale classification.
Additionally, mortgage-backed securities with a carrying value and market value
of approximately $15.4 million, previously classified as available for sale,
were transferred to the held to maturity portfolio.

At September 30, 1996 and 1995, $10,241,000 and $17,568,000, respectively, of
the mortgage-backed securities held to maturity portfolio consists of securities
with underlying adjustable rate loans. Such securities had an estimated market
value of $10,077,000 and $17,474,000, respectively.

The privately-issued REMICs and CMOs and privately-issued pass-through
mortgage-backed securities contained in the Bank's held to maturity and
available for sale portfolios have generally been underwritten by large
investment banking firms with the timely payment of principal and interest on
these securities supported (credit enhanced) in varying degrees by either
insurance issued by a financial guarantee insurer, letters of credit or
subordination techniques. Substantially all such securities are rated AAA by one
or more of the nationally recognized securities rating agencies. These
securities are subject to certain credit-related risks normally not associated
with U.S. Government Agency mortgage-backed securities. Among such risks is the
limited loss protection generally provided by the various forms of credit
enhancements as losses in excess of certain levels are not protected.
Furthermore, the credit enhancement itself is subject to the creditworthiness of
the enhancer. Thus, in the event a credit enhancer does not fulfill its
obligations, the mortgage-backed securities holder could be subject to risk of
loss similar to a purchaser of a whole loan pool. Management believes that the
credit enhancements are adequate to protect the Company from losses, thus the
Company has not provided an allowance for losses on its privately issued
mortgage-backed securities.

(7) MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE
The amortized cost and the estimated market value of mortgage-backed securities
available for sale are summarized as follows:

FHLMC.............................. $ 59,872 $ 491 $ (518) $ 59,845
FNMA............................... 47,596 313 -- 47,909
GNMA............................... 7,336 355 -- 7,691
REMIC and CMO...................... 139,262 261 (626) 138,897
Private-issue pass-through......... 25,886 201 -- 26,087
--------- --------- ---------- ---------
Total.............................. $ 279,952 $ 1,621 $ (1,144) $ 280,429
========= ========= ========== =========

September 30, 1995
----------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ---------
(In Thousands)

FHLMC.............................. $ 72,968 $ 1,139 $ (695) $ 73,412
FNMA............................... 35,191 901 -- 36,092
GNMA............................... 10,578 486 (7) 11,057
REMIC and CMO...................... 56,676 82 (999) 55,759
Private-issue pass-through......... 30,383 162 (71) 30,474
--------- ---------- --------- ---------
Total.............................. $ 205,796 $ 2,770 $ (1,772) $ 206,794
========= ========== ========= =========

The amortized cost and estimated market values of mortgage-backed securities
available for sale, all of which have prepayment provisions, are distributed to
a maturity category based on the estimated average life as shown below. These
principal prepayments are not scheduled over the life of the investment, but are
reflected as adjustments to the final maturity distribution.

September 30, 1996
----------------------------
Gross Estimated
Amortized Market
Losses Value
--------- ---------
(In Thousands)

Due in one year or less................................... $ 27,038 $ 26,980
Due after one year through five years..................... 168,880 169,088
Due after five years through ten years.................... 77,726 77,736
Due after ten years....................................... 6,308 6,625
--------- --------
$ 279,952 $ 280,429
========= =========

Gains and losses were realized on sales of mortgage-backed securities available
for sale as follows:

Year ended September 30,
-------------------------------
1996 1995 1994
-------- --------- --------
(In Thousands)

Gross gains............................................. $ 1,205 $ 60 $ 608
Gross losses............................................ -- (1,044) (3)
-------- -------- --------
Net gains (losses)...................................... $ 1,205 $ (984) $ 605
======== ========= ========

(8) LOANS RECEIVABLE
Loans receivable are summarized as follows (in thousands):

September 30,
-------------------------
1996 1995
---------- ----------

FIRST MORTGAGE LOANS:
One-to-four family conventional residential, including loans
with adjustable rates of $843,860 and $632,036
in 1996 and 1995, respectively....................................... $1,029,636 $ 906,436
Multifamily residential............................................... 171,099 101,065
Commercial real estate................................................ 383,181 355,507
Partially guaranteed by Veterans Administration or insured by
the Federal Housing Administration................................... 14,836 18,812
Participation in loans fully guaranteed by the Agency for
International Development............................................ 26 30
Construction loans, net of undisbursed portion of
approximately $5,470 and $4,025 in 1996 and 1995,
respectively........................................................ 4,369 8,902
Reverse annuity loans, net of undisbursed portion of
approximately $4,416 and $2,734 in 1996
and 1995, respectively............................................... 2,265 2,251
---------- ----------
1,605,412 1,393,003
Unamortized purchase accounting premiums.............................. 1,645 2,426
Unearned purchase accounting discounts................................ (1,993) (2,757)
Unamortized premiums.................................................. 3,677 1,433
Unearned discounts.................................................... (27) (42)
Deferred loan fees.................................................... (4,945) (4,287)
---------- ----------
1,603,769 1,389,776
---------- ----------
OTHER LOANS:
Consumer loans........................................................ 9,227 8,580
Cooperative residential loans......................................... 123,034 141,902
Home improvement loans................................................ 1,035 1,526
Guaranteed student loans ............................................. 51,151 56,673
Commercial business loans............................................. 12,351 11,214
Loans secured by deposit accounts..................................... 8,078 7,917
Second mortgage loans................................................. 2,211 2,147
Home equity loans, net of unused lines of credit of
approximately $9,462 and $12,312 in
1996 and 1995, respectively.......................................... 44,277 46,845
Purchased auto leasing................................................ 18,702 21,063
---------- ----------
270,066 297,867
Unamortized purchase accounting premiums.............................. 52 72
Unearned purchase accounting discounts................................ (52) (70)
Unamortized premiums.................................................. 319 423
Unearned discounts.................................................... (1,391) (1,621)
Deferred loan fees.................................................... (215) (232)
---------- ----------
268,779 296,439
---------- ----------
Less allowance for possible loan losses................................. (19,386) (21,272)
---------- ----------
$1,853,162 $1,664,943
========== ==========

The yield on the average investment in first mortgage loans was 8.07%, 8.28% and
8.42% for the years ended September 30, 1996, 1995 and 1994, respectively.

At September 30, 1996 and 1995, the Bank had commitments of $80,950,000 and
$61,369,000, respectively, to originate first mortgage, cooperative residential
and home equity loans. Such commitments generally have fixed expiration dates
and may require payment of a fee. Since many of the commitments may expire
without being used, the total commitment amounts do not necessarily represent
future cash requirements. Of the $80,950,000 commitments outstanding at
September 30, 1996, $16,258,000 represent fixed rate loans with interest rates
ranging from 5.25% to 10.25% and $64,692,000 represent adjustable rate loans.

At September 30, 1996 and 1995, the Company had commitments of $6,016,000 and
$5,414,000, respectively, to sell qualified fixed rate first mortgage loans. The
commitment prices approximated the carrying value of the loans.

During the years ended September 30, 1996, 1995 and 1994, the Company recognized
net gains (losses) of $.4 million, $(.2) million and $(.4) million,
respectively, on sales of newly originated first mortgage loans.

Substantially all of the Bank's business activity is through originations of
loans secured by real estate with customers located in the New York metropolitan
area. The risk inherent in this portfolio is dependent not only upon regional
and general economic stability which affects property values, but also financial
well-being and creditworthiness of the borrowers. In order to minimize the
credit risk related to this concentration, the Company utilizes conservative
underwriting standards as well as diversifying the type and locations of real
estate projects underwritten in the area.

(9) ALLOWANCE FOR POSSIBLE LOAN LOSSES

Activity in the allowance for possible loan losses is summarized as follows:

As of and For the
Year Ended September 30,
------------------------------
1996 1995 1994
-------- -------- --------
(In Thousands)

Allowance for possible loan losses,
beginning of year......................... $ 21,272 $ 25,705 $ 26,828

Charge-offs:
Commercial real estate................... (974) (2,889) (879)
Residential real estate.................. (730) (1,422) (1,572)
Multifamily residential.................. -- (546) (853)
Other loans.............................. (1,441) (1,442) (901)
-------- -------- --------
Total charge-offs...................... (3,145) (6,299) (4,205)
-------- -------- --------
Less recoveries:
Commercial real estate................. -- -- 349
Residential real estate................ -- 4 47
Other loans............................ 59 75 36
-------- -------- --------
Total recoveries...................... 59 79 432
-------- -------- --------
Net charge-offs..................... (3,086) (6,220) (3,773)
Hamilton's net activity for the quarter
ended December 31, 1994.................... -- 87 --
Addition to allowance, charged to expense... 1,200 1,700 2,650
-------- -------- --------
Allowance at end of year.................... $ 19,386 $ 21,272 $ 25,705
======== ======== ========

The following table sets forth the Bank's nonaccrual loans at the dates
indicated:

September 30,
------------------------------
1996 1995 1994
-------- -------- --------
(In Thousands)

First mortgage loans:
One-to-four family conventional residential $ 12,092 $ 13,391 $ 14,642
Multifamily residential................... 155 131 1,966
Commercial real estate.................... 11,758 14,316 18,208
-------- -------- --------
24,005 27,838 34,816
Other loans - cooperative residential loans. 1,547 2,534 1,717
-------- -------- --------
Total nonaccrual loans...................... $ 25,552 $ 30,372 $ 36,533
======== ======== ========

Additionally, at September 30, 1996, 1995 and 1994 the Bank had $4.4 million,
$5.0 million and $4.0 million, respectively, of consumer and other loans which
are past due 90 days and still accruing interest at the dates indicated. Of the
$4.4 million at September 30, 1996, $3.5 million represents loans guaranteed by
the United States Department of Education through the New York Higher Education
Services Corporation.

The amount of interest income on nonaccrual loans that would have been recorded
had these loans been current in accordance with their original terms, was
$2,654,000, $3,097,000 and $2,972,000 for the years ended September 30, 1996,
1995 and 1994, respectively. The amount of interest income that was recorded on
these loans was $924,000, $1,083,000 and $441,000 for the years ended September
30, 1996, 1995 and 1994, respectively.

At September 30, 1996, 1995 and 1994 the Bank had $5.8 million, $9.1 million and
$9.5 million, respectively, in loans whose terms had been modified in trouble
debt restructurings. The amount of interest income that would have been
recognized for the years ended September 30, 1996, 1995 and 1994 had these loans
remained current in accordance with their original terms was $598,000, $952,000
and $968,000, respectively. The amount of interest income that was recorded on
these loans was $473,000, $725,000 and $740,000 for the years ended September
30, 1996, 1995 and 1994, respectively.

At September 30, 1996, the Bank's recorded investment in impaired loans was
$11.9 million. Due to charge-offs, or the crediting of interest payments to
principal, the loans do not have an impairment reserve at September 30, 1996.
Interest income recognized on impaired loans, which was not materially different
from cash-basis interest income, amounted to approximately $.4 million for the
year ended September 30, 1996. The average recorded investment in impaired loans
during the current fiscal year was approximately $14.5 million. The allowance
for possible loan losses contains additional amounts for impaired loans, as
deemed necessary, to maintain reserves at levels considered adequate by
management.

(10) ACCRUED INTEREST RECEIVABLE
Accrued interest receivable is summarized as follows:

September 30,
--------------------
1996 1995
-------- ---------
(In Thousands)

Debt and equity securities.............................. $ 1,806 $ 821
Mortgage-backed securities.............................. 5,324 5,978
Loans receivable........................................ 13,554 12,912
Interest rate swap arrangements......................... 1,178 2,012
------- --------
$21,862 $ 21,723
======= ========

(11) PREMISES AND EQUIPMENT
Premises and equipment are summarized as follows:

September 30,
--------------------
1996 1995
-------- ---------
(In Thousands)

AT COST:
Land.................................................. $ 651 $ 651
Office buildings and improvements..................... 10,395 9,928
Leasehold improvements................................ 5,898 5,320
Furniture, fixtures and equipment..................... 10,970 9,786
------- --------
27,914 25,685
Accumulated depreciation and amortization............... (14,987) (12,834)
------- --------
$12,927 $ 12,851
======= ========

Depreciation and amortization of premises and equipment, included in occupancy
expense, was approximately $2,153,000, $2,064,000 and $1,817,000 for the years
ended September 30, 1996, 1995 and 1994, respectively.

(12) OTHER ASSETS
Other assets are summarized as follows:

September 30,
--------------------
1996 1995
-------- ---------
(In Thousands)

Net deferred tax asset.................................. $19,393 $14,806
Mortgage servicing rights............................... 1,088 137
Real estate owned, net of allowance for losses of
$266,000 in 1996 and $220,000 in 1995.................. 3,197 1,967
Investment in the Bank's subsidiaries................... 679 919
Prepaid expenses........................................ 1,270 1,417
Other................................................... 7,624 6,462
------- -------
$33,251 $25,708
======= =======

At September 30, 1996, 1995 and 1994, the Bank was servicing first mortgage
loans of approximately $597,017,000, $523,664,000 and $530,317,000,
respectively, which are either partially or wholly owned by others.

The Bank's risk at September 30, 1996 with respect to servicing loans for others
is minimized due to the fact that loans serviced for others are all without
recourse to the originator/servicer. To date, the Bank has not suffered
significant losses from its mortgage servicing activities.

An analysis of the changes in the Company's mortgage servicing rights is as
follows:

As of and For the
Year Ended September 30,
------------------------------
1996 1995 1994
-------- -------- --------
(In Thousands)

Balance at beginning of year................ $ 137 $ 248 $ 647
Additions................................... 1,217 -- --
Amortization................................ (266) (111) (399)
-------- -------- --------
Balance at end of year...................... $ 1,088 $ 137 $ 248
======== ======== ========

Activity in the allowance for losses on real estate owned is summarized as
follows:

As of and For the
Year Ended September 30,
------------------------------
1996 1995 1994
-------- -------- --------
(In Thousands)

Balance at beginning of year................ $ 220 $ 390 $ 750
Provision charged to operations............. 346 361 --
Charge-offs................................. (300) (531) (360)
-------- -------- --------
Balance at end of year...................... $ 266 $ 220 $ 390
======== ======== ========

The Bank has six wholly owned subsidiaries, three of which are inactive. Of the
active subsidiaries, one subsidiary, Alameda Advantage Corp. ("AAC"), is a
limited partner in the partnership which owns the property used for the Bank's
executive and administrative offices. At September 30, 1996 and 1995, the Bank's
investment in AAC amounted to $524,000 and $455,000, respectively.

Two of the subsidiaries, Home Fed Services, Inc. and HF Investors, Inc., were
primarily established for the Bank's entry into offering annuities and other
insurance products through its branch system. At September 30, 1996 and 1995,
the Bank's investment in these subsidiaries amounted to $77,000 and $386,000,
respectively.

The combined financial condition and results of operations of the Bank's
subsidiaries are not significant to the accompanying consolidated financial
statements.

(13) DEPOSITS
Deposits are summarized as follows:

September 30,
-------------------------------------------
1996 1995
--------------------- --------------------
Amount Percent Amount Percent
---------- -------- ---------- --------
(Dollars in Thousands)

Non-interest bearing demand deposits.. $ 37,013 2.16% $ 32,821 1.88%
NOW accounts.......................... 130,831 7.63 116,726 6.67
Passbook accounts..................... 716,827 41.77 751,374 42.96
Variable rate money market
deposit accounts..................... 133,528 7.78 102,937 5.89
---------- ------- ---------- -------
1,018,199 59.34 1,003,858 57.40
---------- ------- ---------- -------
Certificate accounts:
Original term of six months......... 83,943 4.89 98,674 5.64
Original term of 2 1/2years......... 34,784 2.03 46,807 2.68
Other certificates (various
original terms).................... 579,033 33.74 599,535 34.28
---------- ------- ---------- -------
697,760 40.66 745,016 42.60
---------- ------- ---------- -------
$1,715,959 100.00% $1,748,874 100.00%
========== ======= ========== =======

Included in deposits are accounts with denominations of $100,000 or more
totaling approximately $164,720,000 and $137,337,000 at September 30, 1996 and
1995, respectively. The Bank does not use brokered certificates of deposit as a
funding source.

Scheduled remaining maturities of certificate accounts are summarized as
follows:

Within 12 months..................... $ 458,856 65.76% $ 509,750 68.42%
12 to 24 months...................... 134,031 19.21 86,590 11.62
24 to 36 months...................... 51,192 7.34 64,480 8.66
36 to 48 months...................... 43,271 6.20 41,081 5.52
48 to 60 months...................... 9,552 1.37 41,908 5.63
Over 60 months....................... 858 .12 1,207 .15
---------- ------- ---------- -------
$ 697,760 100.00% $ 745,016 100.00%
========== ======= ========== =======

Weighted average stated interest rates on interest-bearing deposits, including
the effect of related interest rate floors, interest rate collars, and interest
rate swaps, as of the respective dates were as follows:

September 30,
--------------------
1996 1995
-------- ---------
(In Thousands)

NOW accounts................................. 1.33% 1.41%
------ ------
Passbook accounts............................ 2.36% 2.29%
------ ------
Variable rate money market deposit accounts.. 2.98% 2.83%
------ ------
Certificate accounts......................... 4.86% 5.50%
------ ------
Total deposits............................... 3.30% 3.59%
====== ======

The average cost of deposits, including the effect of related interest rate
floors, interest rate collars, and interest rate swaps (net of early withdrawal
penalties) approximated 3.47%, 3.55% and 3.18% for the years ended September 30,
1996, 1995 and 1994, respectively.

Interest expense on deposits, including the effect of related interest rate
floors, interest rate collars, and interest rate swaps, is summarized as
follows:

Year Ended September 30,
------------------------------
1996 1995 1994
-------- -------- --------
(In Thousands)

NOW accounts.................................. $ 1,925 $ 2,673 $ 2,610
Passbook accounts............................. 17,509 19,964 23,846
Variable rate money market deposit accounts... 3,357 4,054 3,926
Certificate accounts.......................... 37,679 35,703 26,614
-------- -------- --------
$ 60,470 $ 62,394 $ 56,996
======== ======== ========

On September 30, 1996, Congress passed, and the President signed, legislation
that recapitalized the Savings Association Insurance Fund (the "SAIF"). Under
the major provisions of the legislation, savings institutions, such as the Bank,
are being assessed a one-time assessment of 65.7 basis points per $100 of
insured SAIF-assessable deposits as of March 31, 1995. Since approximately 80.8%
of the Bank's deposits are insured by the SAIF (the remainder are insured by the
Bank Insurance Fund ("BIF")), the Company recorded a one-time charge of $9.4
million during the fourth quarter of fiscal year 1996 which is payable in the
first quarter of fiscal year 1997.

(14) BORROWED FUNDS
Borrowed funds are summarized as follows:

September 30,
---------------------
1996 1995
---------- ---------
(In Thousands)

NOTES PAYABLE - FIXED-RATE ADVANCES FROM THE
FEDERAL HOME LOAN BANK OF NEW YORK:
4.13% to 8.45%, due in 1996........................... $ -- $ 22,375
8.10%, due in 1997.................................... 375 375
---------- ---------
375 22,750
---------- ---------
NOTES PAYABLE - VARIABLE RATE ADVANCES FROM THE
FEDERAL HOME LOAN BANK OF NEW YORK:
5.883% to 6.625%, due in 1996......................... -- 363,000
5.369% to 5.986%, due in 1997......................... 542,000 20,000
---------- ---------
542,000 383,000
---------- ---------
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE:
FIXED RATE AGREEMENTS:
5.79% to 6.00%, due in 1996.......................... -- 190,160
5.370% to 6.150% due in 1997......................... 353,698 --
---------- ---------
353,698 190,160
---------- ---------
VARIABLE RATE AGREEMENTS -
5.7925% to 6.025%, due in 1996....................... -- 150,000
5.09%, due in 1998................................... 100,000 --
---------- ---------
100,000 150,000
---------- ---------
OTHER COLLATERALIZED BORROWINGS:
FIXED RATE FLEXIBLE REVERSE REPURCHASE AGREEMENTS:
7.85%, due in 1996................................... -- 4,700
---------- ---------

SUBORDINATED CAPITAL NOTES, FIXED RATE - 10.84%:
Due in 1996............................................ -- 3,800
Due in 1997............................................ 3,800 3,800
Due in 1998............................................ 3,800 3,800
Due in 1999............................................ 3,800 3,800
---------- ---------
11,400 15,200
---------- ---------

TREASURY, TAX AND LOAN NOTES - 5.84% CALLABLE........... 1,313 1,328
---------- ---------
$1,008,786 $ 767,138
========== =========

Under the terms of a collateral agreement, indebtedness to and outstanding
commitments from the Federal Home Loan Bank of New York (the "FHLB-NY") are
secured by qualifying assets principally in the form of first mortgage loans and
mortgage-backed securities having estimated market values at least equal to 125%
of the amount of total indebtedness and outstanding commitments.

At September 30, 1996, all securities sold under agreements to repurchase were
delivered to the primary dealers who arranged the transactions. The securities
remained registered in the name of the Bank and are returned upon maturity of
the agreement. Securities sold under agreements to repurchase averaged
$328,405,000, $307,657,000 and $232,916,000 during the years ended September 30,
1996, 1995 and 1994, respectively. The maximum amounts outstanding at any

month-end were $453,698,000, $351,855,000 and $271,978,000 during the years
ended September 30, 1996, 1995 and 1994, respectively.

At September 30, 1996, the Bank had outstanding $353.7 million of fixed rate
reverse repurchase agreements with a weighted average interest rate of 5.61% and
remaining maturities of one to twelve months. The Bank may substitute collateral
in the form of U.S. Treasury or mortgage-backed certificates. At September 30,
1996, the borrowings were collateralized by FNMA, FHLMC, REMIC and non-agency
pass-through certificates having a carrying value of approximately $378.0
million and a market value of approximately $372.8 million.

At September 30, 1996, the Bank had outstanding a $100.0 million reverse
repurchase agreement with an interest rate of 5.09% and a remaining maturity of
16 months. The rate on this reverse repurchase agreement is subject to repricing
by the counterparty in January 1997 to a LIBOR based rate, with monthly
adjustments thereafter. The Bank may substitute collateral in the form of U.S.
Treasury, GNMA, FNMA, FHLMC, REMIC, CMO or non-agency pass-through certificates
rated no less than AA. At September 30, 1996, the borrowings were collateralized
by REMIC and non-agency pass-through certificates having a carrying value of
approximately $113.7 million and a market value of approximately $111.6 million.

On November 18, 1988, the Bank issued $25,000,000 in 10.95% (Series A Notes) and
$5,000,000 in 10.52% (Series B Notes) subordinated capital notes (collectively
as the "Notes"). Interest on the Notes is payable in semiannual installments,
commencing May 30, 1989. The remaining principal on the Series A Notes and
Series B Notes is payable in annual installments of $2,800,000 and $1,000,000,
respectively. The Notes are fully subordinated to savings deposit accounts and
other general liabilities of the Bank. Further, a portion of the Notes qualify
as capital for purposes of meeting the regulatory risk-based capital
requirements. The Notes are redeemable in whole or in part, with a prepayment
premium, at the option of the Bank, subject to regulatory approval, at any time.
Deferred issuance costs are being amortized over the period to maturity of the
notes.

On February 3, 1989 the Bank established a Mortgage-Backed Medium-Term Note,
Series A (the "Medium-Term Notes") program. The Medium-Term Notes can be issued
from time to time in designated principal amounts, up to a total remaining
aggregate amount of $180,000,000, with interest rates to be established at the
time of issuance, and with maturities to be set ranging from nine months to
fifteen years from the date of issuance. No amounts were outstanding under this
program at September 30, 1996 and 1995.

Weighted average interest rates on borrowed funds at September 30, 1996 and
1995, including the effect of related interest rate collars, interest rate caps,
and interest rate swaps, amounted to 5.25% and 6.14%, respectively.

The average cost of borrowed funds for the years ended September 30, 1996, 1995
and 1994, including the effect of related interest rate collars, interest rate
caps, and interest rate swaps, was 5.62%, 5.88% and 4.85%, respectively.

Interest expense on borrowed funds, including the effect of related interest
rate collars, interest rate caps, and interest rate swaps, is summarized as
follows:

Year ended September 30,
-----------------------------
1996 1995 1994
------- ------- --------
(In Thousands)

Notes payable................................... $26,764 $19,920 $ 10,897
Securities sold under agreements to repurchase.. 18,175 17,619 9,812
Subordinated capital notes...................... 1,304 1,716 2,059
Other........................................... 33 81 184
------- ------- --------
$46,276 $39,336 $ 22,952
======= ======= ========

(15) ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities are summarized as follows:

September 30,
---------------------
1996 1995
---------- ---------
(In Thousands)

Federal, state and local income taxes payable .......... $ 411 $ --
Accrued interest payable................................ 6,633 5,157
Negative goodwill....................................... 1,068 1,262
Deferred gain on interest rate floor and swap agreements 5,819 7,395
Accrued SAIF recapitalization assessment................ 9,432 --
Accrued expenses and other.............................. 25,909 28,860
------- --------
$49,272 $ 42,674
======= ========

(16) FEDERAL, STATE AND LOCAL TAXES

FEDERAL INCOME TAXES
The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS No. 109") effective October 1, 1993. Prior
to October 1, 1993, deferred income taxes were provided for timing differences
in the recognition of revenues and expenses for tax reporting and financial
statement purposes (an income statement approach), pursuant to Accounting
Principles Board Opinion No. 11.

SFAS No. 109 adopts a balance sheet approach (or liability method) in place of
the income statement approach. The liability method requires that an asset or a
liability, as appropriate, be recorded for financial statement purposes for the
deferred tax consequences of all temporary differences between the tax basis and
financial statement carrying amounts of existing assets and liabilities, which
is measured by applying enacted tax laws and rates. Additionally, SFAS No. 109
permits the recognition of net deferred tax assets based upon the likelihood of
realization of tax benefits in the future. The cumulative effect at October 1,
1993 of the

change in accounting for income taxes which was implemented on a prospective
basis amounted to $5.7 million and is included in the consolidated statement of
income for the year ended September 30, 1994.

The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities are presented below:

September 30,
---------------------
1996 1995
---------- ---------
(In Thousands)

Deferred tax assets:
Allowance for possible loan losses.................... $ 7,976 $ 8,921
SAIF recapitalization................................. 4,020 --
Nonaccrual interest................................... 2,477 2,987
Excess tax over book basis of loans................... 1,009 --
Deferred loan fees.................................... 977 1,831
Real estate owned..................................... 109 742
Premises and equipment................................ 720 445
Unrealized loss on available for sale securities...... 428 --
Other................................................. 2,645 2,972
------- --------
Total gross deferred tax assets..................... 20,361 17,898
------- --------

Deferred tax liabilities:
Excess book over tax basis of loans................... -- 684
Unrealized gain on available for sale securities...... -- 639
Other................................................. 968 1,769
------- --------
Total gross deferred tax liabilities................ 968 3,092
------- --------
Net deferred tax asset.............................. $19,393 $ 14,806
======= ========

Under SFAS No. 109, the Company has a net deferred tax asset of $19.4 million at
September 30, 1996. This represents the anticipated Federal, state and local tax
benefits expected to be realized in future years upon the utilization of the
underlying tax attributes comprising this balance. The Company has reported
taxable income for Federal, state and local income tax purposes in each of the
past three years and in management's opinion, in view of the Company's previous,
current and projected future earnings trend, such net deferred tax asset will be
fully realized. Accordingly, no valuation allowance was deemed necessary for the
net deferred tax asset at September 30, 1996.

Total income tax expense was allocated as follows:

Year ended September 30,
-----------------------------
1996 1995 1994
------- ------- --------
(In Thousands)

Income from operations.............................. $24,776 $19,717 $ 21,740
Shareholders' equity - compensation expense for tax
purposes in excess of amounts recognized for
financial reporting purposes....................... (1,928) (1,488) --
Shareholders' equity - unrealized appreciation
(depreciation) on securities available for sale (1,067) 3,690 (3,051)
------- ------- --------
Total............................................... $21,781 $21,919 $ 18,689
======= ======= ========

The components of income tax expense on operations are as follows:

Year ended September 30,
-----------------------------
1996 1995 1994
------- ------- --------
(In Thousands)

Current:
Federal................................... $ 19,599 $13,917 $ 15,690
State and local........................... 8,697 7,765 7,197
-------- ------- --------
28,296 21,682 22,887
-------- ------- --------

Deferred:
Federal................................... (2,923) (457) (1,476)
State and local........................... (597) (1,508) 329
-------- ------- --------
(3,520) (1,965) (1,147)
-------- ------- --------
Total................................... $ 24,776 $19,717 $ 21,740
======== ======= ========

The effective income tax rates for the years ended September 30, 1996, 1995 and
1994 were 43.6%, 63.0% and 44.2%, respectively. The reconciliation between the
statutory Federal income tax rate and the effective tax rate is as follows:

Year ended September 30,
---------------------------
1996 1995 1994
------ ------ -------

Tax on income at statutory rate......................... 35.0% 35.0% 35.0%

Tax effects of:
State and local income tax, net of
Federal income tax benefit.......................... 9.3 13.0 9.9
Nondeductible costs associated with Hamilton merger.. .- 15.0 .-
Other, net........................................... (.7) .- (.7)
------ ------ ------
Tax at effective rate................................... 43.6% 63.0% 44.2%
====== ====== ======

New York Bancorp files consolidated Federal income tax returns on a
calendar-year basis with the Bank and its subsidiaries. Prior to January 1,
1996, if certain definitional tests and other conditions were met, the Bank was
allowed a special bad debt deduction based on a percentage of taxable income or
on a specified experience formula.

The Bank used the specified experience formula for 1993 and 1995 and the
percentage of taxable income method in 1994. The statutory percentage of the
special bad debt deduction was 8% and was allowable only if the Bank maintained
at least 60% of its total assets in qualifying assets, as defined. If qualifying
assets fall below 60%, the Bank would be required to recapture essentially all
of its bad debt reserve for Federal income tax purposes into taxable income. The
Bank's qualifying assets at September 30, 1996 and 1995 exceeded 60%.

Under legislation enacted in August 1996, the Bank will no longer be permitted
to use the percentage of taxable income method for Federal tax purposes, but
will be permitted to deduct bad debts only as they are incurred. The legislation
also requires the recapture of the excess of tax bad debt reserves at December
31, 1995 over those established as of December 31, 1987 (the "base year"). The
Bank's tax bad debt reserves of $27.9 million as of December 31, 1995 do not
exceed those of the base year. Therefore, the Bank will not be required to
recapture any of its bad debt reserves.

Such reserve reflects the cumulative Federal income tax bad debt deductions to
that date. The base year reserves will continue to be subject to recapture, and
the Bank could be required to recognize a tax liability, under certain
circumstances, including (1) the Bank fails to qualify as a "bank" for Federal
income tax purposes; (2) certain distributions are made with respect to the
stock of the Bank; (3) the bad debt reserves are used for any purpose other than
to absorb bad debt losses; and (4) there is a change in Federal tax law.
However, management is currently not aware of the occurrence of any such
circumstances.

STATE AND LOCAL TAXES
New York Bancorp files combined New York State franchise and New York City
financial corporation tax returns with the Bank and its subsidiaries on a
calendar-year basis. The Company's annual tax liability for each tax was the
greater of a tax based on "entire net income," "alternative entire net income,"
"taxable assets" or a minimum tax. Further, the Company is subject to a
temporary surcharge based upon New York State tax liability. The Company's
provision for New York State and New York City taxes is based on "entire net
income" for the calendar years 1995, 1994 and 1993 and for the nine months ended
September 30, 1996. New York State and New York City do not allow for the
utilization of net operating loss carrybacks or carryforwards for banks.

In response to the aforementioned Federal legislation enacted in August 1996,
the New York State tax law has been amended to prevent a recapture of existing
tax bad debt reserves and to allow for the continued use of the percentage of
taxable income method to determine the bad debt deduction in computing the New
York State tax liability. However, no such amendments have been made to date
with respect to the New York City tax law; therefore, the Company cannot predict
whether such changes will be made or as to the form of any changes.

(17) SHAREHOLDERS' EQUITY

DIVIDEND RESTRICTIONS
In connection with the Bank's conversion to stock form in February 1988, and
Hamilton Saving's conversion to stock form in April 1993, special liquidation
accounts were established at the time of conversions, pursuant to regulations of
the Federal Home Loan Bank Board (the "FHLBB"), the predecessor to the Office of
Thrift Supervision ("OTS"), based on the amount of the Bank's regulatory capital
as of September 30, 1987 and Hamilton Savings' regulatory capital as of
September 30, 1992. In the unlikely event of a future liquidation, eligible
depositors who continue to maintain accounts would be entitled to receive a
distribution from the liquidation accounts. The total amount of the liquidation
account will be decreased as the balances of eligible deposits are reduced on
annual determination dates subsequent to the conversions. The balance of the
liquidation accounts aggregated to approximately $16.9 million at September 30,
1996.

The ability of New York Bancorp to pay dividends depends upon dividend payments
by the Bank to New York Bancorp, which is New York Bancorp's primary source of
income. The Bank is not permitted to pay dividends on its capital stock or
repurchase shares of its stock if its shareholder's equity would be reduced
below the amount required for the liquidation account or applicable regulatory
capital requirements. The Bank is currently allowed under regulation to pay cash
dividends to New York Bancorp in an amount not to exceed 100% of its net income
to date, during a calendar year, plus an amount not to exceed one-half of its
surplus capital ratio at the beginning of the calendar year. Additionally, under
terms of its subordinated capital note agreements, the Bank is permitted to pay,
on a cumulative basis, cash dividends to New York Bancorp in an amount not to
exceed 75% of its net income from November 30, 1988 to date, plus $5.0 million.

3-FOR-2 STOCK SPLIT AND STOCK DIVIDEND
The Company declared a 3-for-2 common stock split which was distributed on July
29, 1993 in the form of a stock dividend. Additionally, the Company declared a
ten percent stock dividend which became effective on February 14, 1994.
Accordingly, information with respect to shares of common stock fully reflects
the stock split and the stock dividend.

TREASURY STOCK TRANSACTIONS
During the year ended September 30, 1996, New York Bancorp repurchased 1,214,212
shares. On September 26, 1996 the Board of Directors approved the repurchase of
up to an additional 10% of the Company's outstanding common stock, bringing the
total then current authority for repurchase to 1,265,604 shares.

At September 30, 1996, the Company has 3,648,050 shares of Treasury stock which,
among other things, could be held to satisfy obligations under the Company's
stock option plans. Treasury stock is being accounted for using the cost method.

REGULATORY CAPITAL
As required by regulation of the OTS, savings institutions are required to
maintain regulatory capital in the form of a "tangible capital requirement," a
"core capital requirement" and a "risk-based capital requirement."

The Bank must meet specific capital guidelines that involve quantitative
measures of the Bank's assets, liabilities, and certain off-balance sheet items
as calculated under regulatory accounting practices. The Bank's capital amounts
are also subject to qualitative judgments by the regulators about components,
risk weightings, and other factors.

As of September 30, 1996, the Bank has been categorized as "adequately
capitalized" by the OTS under the prompt corrective action regulations and
continues to exceed all regulatory capital requirements as detailed in the
following table (dollars in thousands):

TANGIBLE CAPITAL CORE CAPITAL(1) RISK-BASED CAPITAL(2)
--------------------- ---------------------- -----------------------
Amount Percentage(3) Amount Percentage(3) Amount Percentage(3)
------- ------------- -------- ------------- -------- --------------

Total Bank equity................. $138,195 4.70% $138,195 4.70% $138,195 9.86%
Add:
o Allowable portion of
subordinated capital
notes....................... -- .-- -- .-- 1,634 .11
o Other........................ 278 .01 278 .01 17,806 1.27
-------- ------ -------- ------- -------- --------
Capital for regulatory purposes... 138,473 4.71 138,473 4.71 157,635 11.24
Minimum regulatory requirement.... 44,117 1.50 88,234 3.00 112,180 8.00
-------- ------ -------- ------- -------- --------

Excess............................ $ 94,356 3.21% $ 50,239 1.71% $ 45,455 3.24%
======== ====== ======== ======= ======== ========

______________
(1)Under the OTS's prompt corrective action regulations, the core capital requirement was effectively increased to
4.00% since OTS regulations stipulate that as of that date an institution with less than 4.00% core capital will
be deemed to be classified as "undercapitalized."
(2)The OTS adopted a final regulation which incorporates an interest rate risk component into its existing risk-based
capital standard. The regulation requires certain institutions with more than a "normal level" of interest rate
risk to maintain capital in addition to the 8.0% risk-based capital requirement. The Bank does not anticipate
that its risk-based capital requirement will be materially affected as a result of the new regulation.
(3)For tangible and core capital the ratio is to adjusted total assets. For risk-based capital, the ratio is to total
risk-weighted assets.

(18) BENEFITS
PENSION PLAN
All eligible employees of the Bank are included in a defined benefit pension
plan (the "Plan"). Benefits contemplated by the Plan are funded through a group
annuity insurance contract. The Bank contributes to the Plan an amount
sufficient to meet ERISA funding standards.

Hamilton had maintained a noncontributory defined benefit plan for all eligible
employees. The plan was funded through a deposit administration contract with an
insurance company. As of May 1, 1994, the plan was curtailed and all future
benefit accruals ceased. The plan curtailment resulted in a net gain of
approximately $181,000. Subsequent to the merger, all former Hamilton employees
retained by the Bank meeting plan requirements became eligible for participation
in the Plan. Effective December 31, 1995, the former Hamilton plan was merged
with that of the Bank.

The following table sets forth the funded status of the Bank's and Hamilton's
plans and amounts recognized in the Company's consolidated financial statements
at September 30 (in thousands):

1996 1995
------- -------

Actuarial present value of benefit obligation:
Accumulated benefit obligation, including vested
benefits of $10,423 in 1996 and $9,781 in 1995.................. $10,929 $10,352
======= =======

Projected benefit obligations for service rendered to date....... $10,978 $10,380
Plan assets at fair value........................................ 10,166 10,284
------- -------
Projected benefit obligation in excess of plan assets............ (812) (96)
Unrecognized net loss from past experience different from
that assumed and effects of changes in assumptions.............. 1,972 1,246
Unrecognized prior service cost.................................. (971) (1,072)
Unrecognized net obligation at transition being
recognized over fifteen years................................... 261 292
Additional liability............................................. (1,213) (334)
------- -------
Prepaid (accrued) pension cost................................... $ (763) $ 36
======= =======

Net pension cost for the years ended September 30, 1996, 1995 and 1994 included
the following components (in thousands):

1996 1995 1994
------ ------ ------

Service cost - benefits earned during the period.... $ 46 $ 131 $ 467
Interest cost on projected benefit obligation....... 838 844 878
Actual return on plan assets........................ (593) (583) (546)
Net amortization and deferral....................... (371) (439) (233)
Additional liability................................ 879 -- --
------ ------ -----

Net pension cost (benefit) included in non-interest
expenses -- compensation and benefits.............. $ 799 $ (47) $ 566
====== ====== =====

Assumptions used in 1996, 1995 and 1994 to develop the net periodic pension cost
were:

1996 1995 1994
------ ------ ------

Weighted average discount rate.................... 8.00% 9.00% 9.00% to 9.25%
Rate of increase in future compensation levels.... 4.00% 4.00% 4.00%
Expected long-term rate of return on assets....... 9.50% 9.50% 9.00%

In conjunction with its pension plan, the Bank maintains a Supplemental
Executives Retirement Plan (the "SERP Plan") to provide retirement benefits
which would have been provided under the Plan except for limitations imposed by
Section 415 of the Internal Revenue Code.

The following sets forth the SERP Plan's status and amounts recognized in the
Company's consolidated financial statements at September 30 (in thousands):

1996 1995
------- -------

Actuarial present value of benefit obligation:
Accumulated benefit obligation, including vested
benefits of $485 in 1996 and $821 in 1995......................... $ 824 $ 1,120
======= ========

Projected benefit obligations for service rendered to date......... $ 950 $ 1,122
Plan assets at fair value.......................................... -- --
------- --------
Projected benefit obligation in excess of plan assets (950) (1,122)
Unrecognized net (gain) loss from past experience different from
that assumed and effects of changes in assumptions................ 50 (500)
Unrecognized prior service cost being
recognized over fifteen years..................................... 322 350
Additional liability............................................... (247) --
------- --------
Accrued SERP Plan cost included in other liabilities............... $ (825) $ (1,272)
======= ========

Net SERP Plan cost for the years ended September 30, 1996, 1995 and 1994
included the following components (in thousands):

1996 1995 1994
------ ------ ------

Service cost - benefits earned during the period.... $ 35 $ 52 $ 271
Interest cost on projected benefit obligation....... 118 90 113
Actual return on plan assets........................ -- -- --
Net amortization and deferral....................... 27 (7) 45
Settlement loss..................................... 49 -- --
----- ----- -----

Net pension cost included in non-interest
expenses -- compensation and benefits.............. $ 229 $ 135 $ 429
===== ===== =====

Assumptions used in 1996, 1995 and 1994 to develop the net periodic SERP Plan
cost were:

1996 1995 1994
------ ------ ------

Weighted average discount rate................... 7.50% to 8.00% 7.50% to 8.00% 9.00%
Rate of increase in future compensation levels... 4.00% 4.00% 4.00%
Expected long-term rate of return on assets...... N/A N/A N/A

Hamilton had also maintained a SERP. On January 27, 1995, as a result of the
merger, Hamilton's SERP was terminated in accordance with the plan's change in
control provision and distributions in the aggregate amount of $307,000 were
made to all eligible participants. Included in compensation and benefit expense
is $179,000 for the year ended September 30, 1994. Fiscal year 1995 includes
$63,000 in merger and restructuring expenses related to the termination of
Hamilton's SERP.

401(k) PLAN
The Bank maintains a 401(k) Savings Plan (the "401(k) Plan") for all qualified
employees. The terms of the 401(k) Plan provide for employee contributions on a
pre-tax basis up to a maximum of 10% of total compensation, with matching
contributions to be made by the Bank equal to a minimum of 50% of employee
contributions.

Hamilton also had a qualified 401(k) savings plan for its employees in which
Hamilton matched a portion of the employee's contribution. Hamilton's employees
immediately became fully vested in Hamilton's contributions at the time they
were made. Effective December 31, 1995, the former Hamilton plan was merged with
that of the Bank.

RETIREE'S BENEFIT PLAN
The Bank, as part of its overall benefits, provides to its eligible retirees
health coverage and life insurance coverage. Eligible participants are retired
employees of the Bank who retire with a minimum age of 55 and 5 years of
service. The Company has elected to defer and amortize to expense over a twenty
year period the accumulated postretirement benefit obligation of $3.2 million at
the October 1, 1993 date of adoption of SFAS No. 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions." The plan is non-contributory for
those retirees who retired prior to July 1992. The plan was amended during
fiscal year 1995. The amendment included an increase in the cost for future
retirees and placing a cap on the Bank's share of plan costs. Former Hamilton
employees became covered under this amended plan effective February 1, 1995.

The following table sets forth the plan's status and amounts recognized in the
Company's consolidated financial statements at September 30 (in thousands):

1996 1995
------- --------

Accumulated postretirement benefit obligation:
Retirees including covered dependents and beneficiaries........ $ 1,693 $ 2,169
Eligible active participants................................... 100 536
Other active participants...................................... 753 401
------- --------
Total accumulated postretirement benefit obligation........... 2,546 3,106
Plan assets....................................................... -- --
------- --------
Accumulated benefit obligation in excess of plan assets........... (2,546) (3,106)
Unrecognized transition obligation................................ 2,274 2,408
Unrecognized prior service cost................................... (503) (555)
Unrecognized gain................................................. (2,062) (1,538)
------- --------
Accrued benefit obligation........................................ $(2,837) $ (2,791)
======= ========

Net periodic postretirement benefit cost included the following components for
the years ended September 30 (in thousands):

1996 1995 1994
------- ------- -------

Service cost................................... $ 59 $ 51 $ 247
Interest cost.................................. 190 267 390
Amortization of transition obligation
of $3.2 million over 20 years................. 134 146 162
Amortization of prior service cost............. (52) (39) --
Amortization of gain........................... (131) (87) (293)
------- ------- -------
Total postretirement benefit expense......... $ 200 $ 338 $ 506
======= ======= =======

The above plan does not have any assets and the Company presently intends to
maintain the plan as unfunded. The assumed long-term health care cost trend used
to measure the expected cost of benefits under the plan for 1996 is 5.00%. The
discount rate used in determining the accumulated postretirement benefit
obligation is 8.00%. The effect of raising the health care trend by 1% will
increase the service and interest cost and the accumulated benefit obligation by
approximately $34,400 and $300,000, respectively.

The amounts included in compensation and benefit expense for the above plans are
as follows for the years ended September 30 (in thousands):

1996 1995 1994
------- ------- -------

Pension plan................................... $ 799 $ (47) $ 566
Supplemental executives retirement plan........ 229 135 608
401(k) plan.................................... 549 408 424
Retirees' benefit plan......................... 200 338 506
------- ------- -------
$ 1,777 $ 834 $ 2,104
======= ======= =======

Hamilton had also maintained a noncontributory retirement plan for its outside
directors. The plan provided benefits for participants upon reaching age 65, and
required at least 5 years of service, but not exceeding 10 years of service. On
January 27, 1995, the plan was terminated in accordance with the plan's change
in control provisions and distributions, in the aggregate amount of $1,039,600
were made to all eligible participants. Included in compensation and benefit
expense is $25,000 and $100,000 for the years ended September 30, 1995 and 1994,
respectively. Fiscal year 1995 also includes $638,000 in merger and
restructuring expense related to the plan.

(19) STOCK PLANS

STOCK OPTION PLANS
The stock option plans permit New York Bancorp common stock to be issued to key
employees and directors of the Holding Company and its subsidiary. The options
granted under the plans are intended to be either incentive stock options or
non-qualified options.

Options have been granted to purchase common stock at the fair market value of
the stock at the date of grant. Options generally vest over a three year period
from the date of grant and generally expire ten years from the date of grant for
employees and five years from the date of grant for directors.

Hamilton maintained incentive stock option plans for its officers, directors and
other key employees. Generally, these plans granted options to individuals at a
price equivalent to the fair market value at the date of grant and were
exercisable over a ten year period from the date of grant. In accordance with
the plans' change in control provisions, the individuals became fully vested in
their stock option grants on the merger date, January 27, 1995. The options were
exchanged for options of the Company, and are set forth separately in the table
below.

Additionally, stock appreciation rights ("SARs") have been granted to key
employees of the Holding Company and its subsidiary. SARs entitle the grantee to
receive cash equal to the excess of the market value of the shares at the date
the right is exercised over the exercise price. An expense is accrued for the
earned portion of the amount by which the market value of the stock exceeds the
exercise price for each SAR outstanding. The expense related to the SARs for the
years ended September 30, 1996, 1995 and 1994 was approximately $1,775,000,
$171,000 and $360,000 respectively.

The following table summarizes certain information regarding the option plans
and has been prepared after giving effect to the 3-for-2 common stock split and
the ten percent stock dividend.

Number of shares of
---------------------------------------------- Weighted
Non-qualified Average
Incentive Stock Non-statutory Options to Exercise
SARs Options Stock Options Directors Price
------ --------------- ------------- ------------- --------

Balance outstanding at
September 30, 1993 153,000 155,585 189,630 90,000 $12.11
Effect of 10% stock
dividend............... 15,300 15,559 18,962 9,000 N/A
Forfeited............... -- (2,888) -- -- $ 7.88
Granted................. -- 52,637 152,568 -- $17.95
Exercised............... -- (59,891) (32,900) -- $ 8.02
-------- ------- -------- --------
Balance outstanding at
September 30, 1994 168,300 161,002 328,260 99,000 $13.27
Hamilton options
outstanding at
January 27, 1995....... -- -- 306,392 182,824 $ 2.37
Forfeited............... (9,900) (34,178) (48,033) -- $16.51
Granted................. -- 81,031 148,969 -- $19.34
Exercised............... (19,800) (60,470) (324,994) -- $ 2.08
-------- ------- -------- --------
Balance outstanding at
September 30, 1995 138,600 147,385 410,594 281,824 $13.39
Forfeited............... -- (2,891) -- (24,750) $ 5.88
Granted................. -- 74,238 79,012 24,750 $22.24
Exercised............... -- (31,318) -- (142,720) $ 7.32
-------- ------- -------- --------
Balance outstanding at
September 30, 1996 138,600 187,414 489,606 139,104 $16.36
======== ======= ======== ========

RECOGNITION AND RETENTION PLAN ("RRP")
Hamilton maintained a RRP, under which restricted stock awards were made to
officers, directors and other key employees, and an Employee Stock Ownership
Plan (the "ESOP"). In accordance with the plans' change in control provisions,
the participants became fully vested on the merger date, January 27, 1995.
Distributions of the shares in the plans have been made to participants.
Included in compensation and benefit expense is $464,000 and $1,491,000 for the
years ended September 30, 1995 and 1994, respectively. Fiscal year 1995 also
includes $4,992,000 in merger and restructuring expense related to these plans.

(20) COMMITMENTS, CONTINGENCIES AND CONTRACTS

In the normal course of its business, the Company is a defendant in certain
claims and legal actions arising in the ordinary course of business. In
addition, on July 1, 1994, a purported class action complaint was filed in the
Delaware Chancery Court on behalf of the shareholders of Hamilton by Adar
Equities, Ltd. as plaintiff, naming, among others, New York Bancorp as a
defendant. An identical complaint was filed by the Serious Software Corporation
on July 7, 1994 in the Delaware Chancery Court. Plaintiffs allege that certain
directors and senior officers of Hamilton breached their fiduciary duties to
Hamilton shareholders. New York Bancorp is alleged to have aided and abetted
this breach by allegedly providing them the promise of continued employment and
monetary incentives in exchange for entering into a merger agreement. Plaintiffs
claimed that if the merger was approved by shareholders of New York Bancorp and
Hamilton, the consideration that Hamilton shareholders would receive in exchange
for their Hamilton common stock would be "grossly inadequate." Plaintiffs seek
various remedies, including an injunction to prevent the consummation of the
merger and compensatory damages in an unspecified amount. On September 19, 1994,
defendants moved to dismiss the complaints on the ground that they fail to state
a claim upon which relief could be granted. In the opinion of management, after
consultation with legal counsel, the ultimate disposition of these matters will
not have a material adverse effect on the consolidated financial condition of
the Company.

The Company has obligations under a number of noncancellable leases on property
used for banking purposes. These leases contain escalation clauses which provide
for increased rental expense based on a percentage of increases in real estate
taxes. Rental expense under these leases, included in non-interest expense -
occupancy, for the years ended September 30, 1996, 1995 and 1994 approximated
$2,096,000, $2,040,000 and $2,025,000, respectively. The projected minimum
rentals under existing operating leases are as follows:

Year ending
September 30, Amount
------------- --------
(In Thousands)

1997................................. $ 1,814
1998................................. 1,802
1999................................. 1,632
2000................................. 971
2001................................. 572
Later years.......................... 3,643
-------
$10,434
=======

(21) OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
The Company enters into a variety of financial instruments with off-balance
sheet risk in the normal course of business.

INTEREST RATE SWAP ARRANGEMENTS
The Company enters into interest rate swap arrangements to manage the
repricing characteristics of its interest-bearing liabilities. Such
agreements provide for the concurrent exchange of its current and future
interest payments on either short-term money market certificates of
deposit accounts or variable rate borrowed funds for another party's
obligations for interest payments on an equivalent amount of fixed-rate
indebtedness. The principal or notional amounts of these arrangements are
not reflected in the consolidated statements of financial condition. The
incremental revenue or expense associated with interest rate swaps is
recognized over the term of the swap arrangement and is presented as a
component of the interest expense of the related liability. Gains and
losses resulting from the early termination of swap arrangements are
amortized over the remaining term of the swap arrangement.

The effect of interest rate swap arrangements at September 30, 1996 was to
fix the Company's interest cost at a weighted average rate of 4.79% on the
agreed-upon amount of funds for approximately six months, the remaining
weighted average terms of the arrangements. Outstanding notional amounts
of interest rate swap arrangements were $600.0 million and $205.0 million
at September 30, 1996 and 1995, respectively. At September 30, 1996,
mortgage-backed securities with a market value of $10.2 million were
pledged as collateral on these arrangements. The Bank's credit risk with
respect to the interest rate swap agreements is in the risk of
nonperformance by the other party to the agreements. However, the Bank
does not anticipate nonperformance by the counterparty and controls the
risk through its usual monitoring procedures.

Interest rate swaps outstanding at September 30, 1996 are summarized as
follows (in thousands):

Fixed Variable
Notional Interest Rate Interest Rate
Amount Paying Receiving Maturity
-------- ------------- ------------- ------------

_______________________
(1)These $200 million in interest rate swaps have been extended through
June 1997 whereby the fixed interest pay rate will be 4.69% beginning
in December 1996.
(2)In an effort to secure the hedge position provided against interest
rate risk, the Bank in July 1996 terminated its position as a party to
$200.0 million of interest rate swaps for the six month period
December 1996 through June 1997. The gain of $1.5 million from these
terminated interest rate swaps is being deferred, and will be
amortized as a reduction of interest expense over the period December
1996 through June 1997.

At September 30, 1996 the Company's interest rate swaps had an unrealized
gain amounting to $2.9 million. Further, at September 30, 1996 there was
$1.5 million of net deferred gains relating to terminated interest rate
swap contracts.

INTEREST RATE COLLAR, INTEREST RATE FLOOR,
AND INTEREST RATE CAP ARRANGEMENTS
The Company uses interest rate collar, interest rate floor, and interest
rate cap arrangements to protect the Bank against interest rate risk
associated with the repricing of its interest-bearing liabilities.
Premiums paid for interest rate collar, interest rate floor, and interest
rate cap arrangements are amortized to interest expense of the related
liability over the contractual terms of these arrangements using the
straight-line method. When a liability is prepaid, any related interest
rate collar, interest rate floor, or interest rate cap is re-designated
to another interest-bearing liability at the lower of cost or estimated
market value and the loss, if any, is included in the gain or loss on
early extinguishment of the liability. Interest received or paid under
the terms of these arrangements is accrued and recorded as a reduction or
increase of interest expense of the related interest-bearing liability.

At September 30, 1996, the Bank was a party to $700.0 million of interest
rate collar agreements which mature in August 1998. These agreements are
intended to reduce the interest rate risk associated with certain
short-term borrowings and certificates of deposit. Under the terms of
these agreements, the Bank receives interest when the three month LIBOR
index is in excess of 7.50%, and pays interest when the three month LIBOR
index is less than 5.00%. At September 30, 1996, the three month LIBOR
was 5.625%. At September 30, 1996 mortgage-backed securities with a
market value of $10.5 million were pledged as collateral on these
arrangements. The Bank's credit risk with respect to these interest rate
collar arrangements is in the risk of nonperformance by the other party
to the agreements. However, the Bank does not anticipate nonperformance
by the counterparty and controls the risk through its usual monitoring
procedures. At September 30, 1996, the unamortized premium on the Bank's
interest rate collars amounted to $.8 million which approximated the
current market value.

During fiscal year 1995 the Bank was a party to $1.0 billion of interest
rate floor agreements which were scheduled to expire on February 22,
1998. During fiscal year 1995, in an effort to secure the hedge position
provided against the aforementioned interest rate risk, the Bank
terminated its position as a party to the $1.0 billion of interest rate
floor agreements. Accordingly, and in conformity with generally accepted
accounting principles, the Company deferred recognition of the gain on
the terminated interest rate floor agreements and is amortizing such gain
as an adjustment to the cost of interest-bearing deposit liabilities over
the original contractual life of the interest rate floor agreements. At
September 30, 1996 the amount of the unamortized gain was $4.3 million.

STOCK INDEXED CALL OPTIONS
The Bank uses stock indexed call options for purposes of hedging its
MarketSmart CD's and MarketSmart I.R.A. CD's. The call options hedge the
interest rate paid on these 5 year CD deposits which is an annual
percentage yield based on the changes in the Standard & Poor's 500
Composite Stock Price Index ("S & P Index") during each of the 5 year
terms of the CDs. Premiums paid on the call options are amortized to
interest expense over the terms of the underlying CD using the straight
line method. Gains and losses, if any, resulting from the early
termination of the call option are deferred and amortized to interest
expense over the remaining term of the underlying CD.

At September 30, 1996 the Company had approximately $2.6 million in
contracts for purposes of hedging the S & P Index. The call options
maturities range from March 1999 through August 1999. The Company carries
stock indexed call options at market value. Further, at September 30,
1996 there were no deferred gains or losses relating to terminated
contracts. The Bank ceased offering MarketSmart CDs during fiscal year
1995 due to its inability to purchase stock indexed call options.

FINANCIAL FUTURES TRANSACTIONS
The Company from time to time may enter into various financial futures contracts
to protect against changes in the market value of various interest-earning
assets and interest-bearing liabilities, including the repricing of interest
rate floor arrangements. Realized gains and losses on these contracts are
deferred and accounted for as premiums or discounts on the related assets,
liabilities or interest rate floor resets to the extent such contracts are
matched against specific assets, liabilities or interest rate floor resets and
meet specific hedge correlation criteria. Contracts which are not matched
against specific assets, liabilities, or the repricing of interest rate floor
arrangements or do not meet correlation criteria are accounted for at market
value with the resulting gain or loss recognized in operations. At September 30,
1996 and 1995 the Company has no outstanding financial future transactions.

During the years ended September 30, 1996, 1995 and 1994, the Bank's net
interest income increased (decreased) by $3.5 million, $1.2 million and $(1.5)
million, respectively, as a net result of off-balance sheet financial
instruments.

(22) FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument is the amount at which the asset or
obligation could be exchanged in a current transaction between willing parties,
other than in a forced or liquidation sale. Fair value estimates are made at a
specific point in time based on relevant market information and information
about the financial instrument. These estimates do not reflect any premium or
discount that could result from offering for sale at one time the entire
holdings of a particular financial instrument. Because no market value exists
for a significant portion of the financial instruments, fair value estimates are
based on judgments regarding future expected loss experience, current economic
conditions, risk characteristics of various financial instruments, and other
factors. These estimates are subjective in nature, involve uncertainties and
matters of judgment and, therefore, cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.

Fair value estimates are determined for on and off-balance sheet financial
instruments, without attempting to estimate the value of anticipated future
business, and the value of assets and liabilities that are not considered
financial instruments. Additionally, tax consequences related to the realization
of the unrealized gains and losses can have a potential effect on fair value
estimates and have not been considered in many of the estimates.

The following table summarizes the carrying values and estimated fair values of
the Company's on-balance sheet financial instruments:

September 30,
----------------------------------------------------
1996 1995
------------------------ --------------------------
Estimated Estimated
Carrying Fair Carrying Fair
Value Value Value Value
----------- ----------- ------------ ------------
(In Thousands)

FINANCIAL ASSETS:
Cash and cash equivalents..... $ 23,745 $ 23,745 $ 45,104 $ 45,104
Trading account securities.... -- -- 2,003 2,003
Debt and equity securities.... 136,776 136,774 67,452 67,380
Federal Home Loan Bank stock.. 27,938 27,938 20,288 20,288
Mortgage-backed securities.... 831,246 815,031 871,520 844,297
Loans receivable, net......... 1,853,162 1,872,423 1,664,943 1,690,532

FINANCIAL LIABILITIES:
Deposits...................... 1,715,959 1,721,433 1,748,874 1,755,704
Borrowed funds................ 1,008,786 1,008,136 767,138 767,735

The following methods and assumptions were utilized in estimating the fair
values of its on-balance sheet financial instruments at September 30, 1996 and
1995:

CASH AND CASH EQUIVALENTS
The estimated fair values are assumed to equal the carrying values as these
financial instruments are either due on demand or mature within 90 days.

DEBT AND EQUITY SECURITIES AND MORTGAGE-BACKED SECURITIES
Estimated fair values of debt and equity securities and mortgage-backed
securities, both available for sale and held to maturity, are generally
predicated upon quoted market prices or dealer quotes, or in the absence of such
quotes, on quoted market prices for securities with similar credit, maturity and
interest rate characteristics.

LOANS RECEIVABLE, NET
Estimated fair values are calculated for pools of loans with similar
characteristics. The loans are first segregated by type, such as one-to-four
family residential, other residential, commercial, and consumer, and then
further segregated into fixed and adjustable rate categories and seasoned and
nonseasoned categories.

Estimated fair values are derived by discounting expected future cash flows.
Expected future cash flows are based on contractual cash flows, adjusted for
prepayments. Prepayment estimates are based on a variety of factors including
the Bank's experience with respect to each loan category, the effect of current
economic and lending conditions, and regional statistics for each loan category,
if available. The

discount rates used are based on market rates for new loans of similar type and
purpose, adjusted, when necessary, for factors such as servicing cost, credit
risk, and term.

As mentioned previously, this technique of estimating fair value is extremely
sensitive to the assumptions and estimates used. While management has attempted
to use assumptions and estimates which are the most reflective of the loan
portfolio and the current market, a greater degree of subjectivity is inherent
in these values than those determined in formal trading marketplaces. As such,
readers are cautioned in using this information for purposes of evaluating the
financial condition and/or value of the Company in and of itself or in
comparison with any other company.

DEPOSITS
The fair value of deposit liabilities with no stated maturity (NOW, money
market, savings accounts and non-interest bearing accounts, which represent
59.3% of all deposit liabilities) are equal to the carrying amounts payable on
demand. The fair value of certificates of deposit represent contractual cash
flows discounted using interest rates currently offered on deposits with similar
characteristics and remaining maturities.

Under generally accepted accounting principles, these estimated fair values do
not include the intangible value of core deposit relationships which comprise a
significant portion of the Bank's deposit base. However, management believes
that the Bank's core deposit relationships provide a relatively stable, low cost
funding source which has a substantial intangible value separate from the
deposit balances.

BORROWED FUNDS
The estimated fair value of borrowed funds is calculated based on the discounted
value of contractual cash flows using interest rates currently in effect for
borrowings with similar maturities and collateral requirements.

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
The fair values of interest rate swap agreements, interest rate collars,
interest rate floors, interest rate caps and stock indexed call options are
obtained from dealer quotes and represent the cost of terminating the
agreements. The estimated fair value of open off- balance sheet financial
instruments results in an unrealized gain (loss) of $2.9 million and $(.5)
million at September 30, 1996 and 1995, respectively.

Further, the estimated fair value of commitments to extend credit is estimated
using the fees charged to enter into similar agreements, taking into account the
remaining terms of the agreements and the present creditworthiness of the
counterparties. Generally, for fixed-rate loan commitments, fair value also
considers the difference between current levels of interest rates and the
committed interest rates. The fair value of commitments to purchase
mortgage-backed securities is based on the estimated cost to terminate them or
otherwise settle the obligations with the counterparties. The estimated fair
value of these off-balance sheet financial instruments results in no unrealized
gain or loss at September 30, 1996 and 1995.

(23) RECENT ACCOUNTING PRONOUNCEMENTS

In March 1995, the FASB issued Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-lived Assets and for Long-lived
Assets To Be Disposed Of" ("SFAS No. 121 "). The Statement is effective for
financial statements issued for fiscal years beginning after December 15, 1995.
The Statement establishes accounting standards for, among other things, the
impairment of long-lived assets. The Statement requires that long-lived assets
be reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The Company adopted
SFAS No. 121 on October 1, 1996. Adoption of SFAS No. 121 did not have a
significant effect on the Company's financial condition or results of
operations.

In October 1995, the FASB issued Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"). The Statement
is effective for fiscal years beginning after December 15, 1995. The Statement
establishes accounting and reporting standards for stock-based employee
compensation awards granted in fiscal years that begin after December 15, 1994.
Examples of such plans are stock purchase plans, stock options, restricted
stock, and stock appreciation rights. The Statement defines a fair value based
method of accounting for employee stock options or similar equity instruments
and encourages all entities to adopt that method of accounting. Entities may
elect, however, to remain with previous accounting standards which do not
require the fair value method of accounting. Those entities electing not to
adopt the fair value method of accounting must make pro forma disclosures of net
income and earnings per share as if the fair value method of accounting defined
in the Statement were adopted. Under the fair value based method, compensation
cost is measured at the grant date based on the value of the award and is
recognized over the service period, which is usually the vesting period. The
Company has adopted SFAS No. 123 effective October 1, 1996, and has elected to
remain with the previous accounting standard which does not require the fair
value method of accounting. Proforma disclosures as if the fair value method
were adopted will be presented in future financial statements. Based on this
method of adoption, SFAS No. 123 will not have a significant effect on the
Company's financial condition or results of operations.

45
38

financial assets when control has been surrendered, and derecognizes liabilities
when extinguished. This Statement provides consistent standards for
distinguishing transfers of financial assets that are sales from transfers that
are secured borrowings. The Company plans to adopt SFAS No. 125 on January 1,
1997. Based on its review of the Statement, management does not believe that
adoption of SFAS No. 125 will have a material effect on the Company.

(24) PARENT COMPANY ONLY FINANCIAL INFORMATION
New York Bancorp operates a wholly owned subsidiary, Home Federal Savings Bank.
The earnings of the Bank are recognized by the Holding Company using the equity
method of accounting. Accordingly, earnings of the Bank are recorded as
increases in the Holding Company's investment and any dividends would reduce the
Holding Company's investment in the Bank. The following is the condensed
financial statements for New York Bancorp Inc. (parent company only) as of
September 30, 1996 and 1995 and for the years ended September 30, 1996, 1995 and
1994:

CONDENSED STATEMENTS OF FINANCIAL CONDITION

September 30,
-------------------
1996 1995
-------- --------
(In Thousands)

ASSETS
Cash and due from banks................................. $ 236 $ 112
Money market investments................................ 10,700 8,418
Debt and equity securities available for sale........... 4,841 4,489
Investment in Bank, at equity........................... 138,195 146,169
Other................................................... 195 80
-------- --------
$154,167 $159,268
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued expenses and other liabilities.................. $ 2,264 $ 2,882
Shareholders' equity.................................... 151,903 156,386
-------- --------
$154,167 $159,268
======== ========

CONDENSED STATEMENTS OF INCOME

Year ended September 30,
-------------------------------
1996 1995 1994
-------- -------- ---------
(In Thousands)

Dividend from Bank.......................... $ 37,352 $ 26,200 $ 11,879
Interest income............................. 509 720 685
Interest expense............................ -- (48) (182)
Non-interest income (loss).................. 3,141 353 (4)
Non-interest expense........................ (410) (649) (697)
-------- -------- --------
Income before income taxes and equity in
undistributed earnings of Bank............. 40,592 26,576 11,681
Income tax benefit (expense)................ (1,471) (154) 90
-------- -------- --------
Income before equity in undistributed
earnings of Bank........................... 39,121 26,422 11,771
Excess of dividends over current year earnings (7,115) (14,860) --
Equity in undistributed earnings of Bank.... -- -- 21,381
-------- -------- --------
Net income.................................. $ 32,006 $ 11,562 $ 33,152
======== ======== ========

CONDENSED STATEMENTS OF CASH FLOWS

Year ended September 30,
--------------------------------
1996 1995 1994
--------- --------- --------
(In Thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income..................................................... $ 32,006 $ 11,562 $ 33,152
Adjustments to reconcile net income to net cash
provided by operating activities:
Undistributed earnings of the Bank........................... 7,115 14,860 (21,381)
Gain on sale of debt and equity securities
available for sale.......................................... (3,141) (295) --
Amortization of premiums..................................... -- 48 150
Amortization of ESOP and RRP................................. -- 464 1,491
Termination of ESOP and RRP.................................. -- 4,992 --
(Increase) decrease in other assets.......................... 281 392 (338)
Increase (decrease) in other liabilities..................... 1,519 (241) (227)
-------- -------- --------
Total adjustments............................................ 5,774 20,220 (20,305)
-------- -------- --------
Net cash provided by operating activities..................... 37,780 31,782 12,847
-------- -------- --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of mortgage-backed securities
available for sale............................................ -- 6,957 --
Proceeds from sale of debt and equity securities
available for sale............................................ 16,336 1,159 --
Investment in Bank............................................. -- (105) (1,000)
Investment in mortgage-backed securities
available for sale............................................ -- -- (2,112)
Investment in debt and equity securities available for sale.... (14,457) (4,812) (480)
Principal payments on mortgage-backed securities
available for sale............................................ -- 2,273 5,512
-------- -------- --------
Net cash provided by investing activities..................... 1,879 5,472 1,920
-------- -------- --------

CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of common stock for
treasury or retirement........................................ (29,028) (32,496) (8,320)
Proceeds from sale of treasury stock........................... -- 4,530 --
Repayment of long term debt.................................... -- (217) (543)
Payment of common stock dividends.............................. (9,427) (8,156) (5,582)
Cash paid in lieu of fractional shares
resulting from stock split and dividend....................... -- -- (3)
Exercise of stock options...................................... 1,202 872 819
-------- -------- --------
Net cash used by financing activities......................... (37,253) (35,467) (13,629)
-------- -------- --------
Net increase in cash and cash equivalents........................ 2,406 1,787 1,138
Cash and cash equivalents at beginning of year................... 8,530 8,187 7,049
Hamilton's net cash flows for the three months
ended December 31, 1994......................................... -- (1,444) --
-------- -------- --------
Cash and cash equivalents at end of year......................... $ 10,936 $ 8,530 $ 8,187
======== ======== ========

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES:
Transfer of mortgage-backed securities held to maturity
to mortgage-backed securities available for sale................ $ -- $ -- $ 11,630
======== ======== ========

(25) QUARTERLY FINANCIAL DATA (UNAUDITED)

Selected quarterly financial data for fiscal years ended September 30, 1996 and
1995 is presented below:

FISCAL 1996 Fiscal 1995
------------------------------------------------------------------------------------------------------
Quarter Ended
------------------------------------------------------------------------------------------------------
September 30, June 30, March 31, December 31, September 30, June 30, March 31, December 31,
1996 1996 1996 1995 1995 1995 1995 1994
------------- -------- --------- ---------- ------------- -------- ---------- ------------
(In Thousands except per share data)

QUARTERLY OPERATING DATA:
Interest income................ $54,349 $52,392 $50,091 $50,659 $50,843 $49,714 $48,990 $47,425
Interest expense............... 27,528 26,486 25,741 26,991 27,546 26,514 24,860 22,810
------- ------- ------- ------- ------- ------- ------- -------

Net interest income............ 26,821 25,906 24,350 23,668 23,297 23,200 24,130 24,615
Provision for possible loan
losses........................ (300) (300) (300) (300) (400) (400) (400) (500)
------- ------- ------- ------- ------- ------- ------- -------
Net interest income after
provision for possible
loan losses................... 26,521 25,606 24,050 23,368 22,897 22,800 23,730 24,115
------- ------- ------- ------- ------- ------- ------- -------
Non-interest income
(loss):
Loan fees and service
charges..................... 676 673 790 631 605 610 588 763
Net gain (loss) on sales
of mortgage loans
and securities
available for sale.......... 1,972 742 1,529 507 303 125 (1,177) (339)
Other........................ 1,848 2,008 1,727 1,564 1,421 1,316 1,280 1,117
------- ------- ------- ------- ------- ------- ------- -------
Total non-interest income...... 4,496 3,423 4,046 2,702 2,329 2,051 691 1,541
------- ------- ------- ------- ------- ------- ------- -------
Non-interest expense:
General and administrative.... 12,280 11,714 11,631 11,910 10,720 12,533 12,858 12,857
Merger and restructuring...... -- -- -- -- -- -- 19,024 --
Real estate operations, net... 123 253 (46) 133 223 (59) 345 374
SAIF recapitalization......... 9,432 -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Total non-interest expense... 21,835 11,967 11,585 12,043 10,943 12,474 32,227 13,231
------- ------- ------- ------- ------- ------- ------- -------
Income (loss) before
income tax expense............ 9,182 17,062 16,511 14,027 14,283 12,377 (7,806) 12,425
Income tax expense............. 3,810 7,432 7,335 6,199 6,303 5,458 1,998 5,958
------- ------- ------- ------- ------- ------- ------- -------
Net income (loss).............. $5,372 $9,630 $ 9,176 $7,828 $7,980 $ 6,919 $(9,804) $6,467
======= ======= ======= ======= ======= ======= ======= =======

Earnings (loss) per
common share.................. $.47 $.81 $.76 $.64 $.63 $.51 $(.73) $.48

- ---------------
Summation of the quarterly earnings per common share, due to the averaging effect of the number of shares and share equivalents
throughout the year, does not necessarily equal the annual amount.

INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------

To The Board of Directors and Shareholders of New York Bancorp Inc.:

We have audited the accompanying consolidated statements of financial condition
of New York Bancorp Inc. and Subsidiary as of September 30, 1996 and 1995 and
the related consolidated statements of income, changes in shareholders' equity
and cash flows for each of the years in the three-year period ended September
30, 1996. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of New York Bancorp
Inc. and Subsidiary as of September 30, 1996 and 1995 and the results of their
operations and their cash flows for each of the years in the three-year period
ended September 30, 1996, in conformity with generally accepted accounting
principles.

As discussed in note 16 to the consolidated financial statements, effective
October 1, 1993, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 109 (Accounting for Income Taxes).

/s/KPMG Peat Marwick LLP
October 29, 1996
Jericho, New York

HOME FEDERAL SAVINGS BANK
- ------------------------------------------------------------------------------------------------------------------------------
A New York Bancorp Company

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

EXECUTIVE OFFICERS

PATRICK E. MALLOY, III MICHAEL A. MCMANUS, JR. STAN I. COHEN
Chairman President and Senior Vice President,
Chief Executive Officer Chief Financial Officer and
Secretary

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

First Vice Presidents

GEORGE J. AMENTAS CARMINE BRACCO RICHARD F. ROTHSCHILD TERRENCE S. WALSH
Treasurer EDP & Operations Marketing Multifamily Lending
ROBERT J. ANRIG DENNIS HODNE EDWARD J STEUBE
Lending Retail Banking Business Development

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

Vice Presidents

CHARLES W. BAKER WILLIAM M. DOWD JOHN M. MORA CAROLINE M. TROISI
Senior Underwriter EDP Asset/Liability Management Market Area Manager
THOMAS J. CAPOBIANCO MICHAEL J. FINK CAROLE L. SCIALDONE KEVIN J. WOLFE
Mortgage Servicing Loan Production Manager Human Resources Accounting
JAMES H. CARTER DAVID W. FRY JAMES SCIOLTO JOSEPH J. ZEGAR
Operations Financial Reporting Branch Administration Internal Audit
JOHN P. CARTER, JR. LOUIS L. HALLISEY JONATHAN D. SEEM CLIFFORD J. ZOLLER
Credit Administration Senior Underwriter-NY Business Development Commercial Lending
DONNA J. DIGIROLAMO SEAN J. HOWLAND MARK E. SHERIDAN
Legal Loan Review Senior Underwriter-NJ Commercial Lending

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

Assistant Vice Presidents

ROBERT P. CAMMARATA TERI L. GEORGE BIAGIO B. MADAIO LOUIS J. ROSADO
Market Area Manager Market Area Manager Market Area Manager Loan Officer
RICHARD M. CHIN BETTY GERBINO DEBORAH L. MARTIN ALBERT A. TAMER
Cost Accounting Training Consumer Lending Market Area Manager
FRANK J. CLAPS WILLIAM A. GUIDUCCI MICHAEL H. MATTHEWS FRANK J. TRICK
Market Area Manager Market Area Manager Appraisals Loan Production Coordinator
KAREN A. FLANAGAN SUSAN LADONE RAYMOND B. OBIOL JAMES R. WHITEHOUSE
Lending Manager In-Store Banking Loan Center Manager Loan Center Manager
THOMAS B. FORD ROBIN L. LANE LORI PRIEST THERESA A. ZABRANSKY
Commercial Lending Purchasing Mortgage Servicing EDP

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

Other Officers

VOULA ARIANAS MARY ELLEN DESIDERIO CHARLES R. MAASS ELIZABETH POWELL
Branch Manager Assistant Mortgage Officer EDP Facilities Officer Branch Manager
SUE ANN BECK EILEEN C. DIGNAM JEAN-ALBERT MAISONNEUVE DUILIO RENDE
Branch Manager Assistant Mortgage Officer Marketing Officer Network Officer
LINDA BISHOP CATHERINE L. DITIRRO ANNA MAE MACAVOY FRANCESCA SALATTI
Investor Relations Officer Branch Manager Branch Manager Branch Manager
CHARLES F. BIVONA DIANE M. DODDO ROBERT P. MARONEY ANNE P. SCHULTHEIS
Branch Manager Branch Operations Officer Assistant Mortgage Officer Branch Manager
RONALD P. BRACK BERNARD J. DUFFY THOMAS MCCALL SUDARSHAN SETH
Branch Manager Branch Manager AS 400 Systems Officer Electronic Banking Officer
MICHAEL L. CAPOZIELLO JOHN D. HENNESSEY SUSAN MCKIERNAN MARILYN SILVER
Branch Manager Branch Manager Branch Manager Branch Manager
DAVID J. CARBALLEIRA ELIZABETH A. HOLLAND KATHLEEN M. METZ WILLIAM K. SORIANO
Branch Manager Branch Manager Assistant Mortgage Officer Branch Manager
JANET R. CIAFARDONI GINA KATZ GRACE A. NICOLAOU LOUISE M. TIMMS
Branch Manager Branch Manager Branch Manager Branch Manager
LOUIS DALLOJOCONO HOLLY KIMBALL-TEMPESTA ERIC P. PARAS GORDON WUERTH
Loan Originations Officer Audit Officer Branch Manager PC Systems Officer

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HOME FEDERAL SAVINGS BANK
- --------------------------------------------------------------------------------
A New York Bancorp Company

CORPORATE HEADQUARTERS
New York Bancorp Building
241-02 Northern Boulevard, Douglaston, NY 11362-1061 (718) 631-8100

BRANCH LOCATIONS
QUEENS
70-24 Myrtle Avenue, Glendale, NY 11385 (718) 497-5000
83-24 Woodhaven Boulevard, Glendale, NY 11385 (718) 849-1300
155-14 Cross Bay Boulevard, Howard Beach, NY 11414 (718) 641-6510
248-40 Northern Boulevard, Little Neck, NY 11363 (718) 428-7100
* 70-01 Forest Avenue, Ridgewood, NY 11385 (718) 821-2000
145-15 243rd Street, Rosedale, NY 11422 (718) 527-6100

BROOKLYN
9502 3rd Avenue, Brooklyn, NY 11209 (718) 745-4400
6501 11th Avenue, Brooklyn, NY 11219 (718) 837-9100
7401 13th Avenue, Brooklyn, NY 11228 (718) 232-7200
* 413 86th Street, Brooklyn, NY 11209 (718) 833-4300
179 Avenue U, Brooklyn, NY 11223 (718) 946-5000
2123 Avenue U, Brooklyn, NY 11229 (718) 332-5200
420 Court Street, Brooklyn, NY 11231 (718) 625-4234
o 1710 Avenue Y (Edward's), Brooklyn, NY 11235 (718) 332-6111

STATEN ISLAND
o 985 Richmond Avenue (ShopRite), Staten Island, NY 10314 (718) 370-1999

NASSAU
41 Forest Avenue, Glen Cove, NY 11542 (516) 671-6767
35 Merrick Avenue, Merrick, NY 11566 (516) 623-3900
* 210 Mineola Boulevard, Mineola, NY 11501 (516) 742-1500
77 Lincoln Avenue, Rockville Centre, NY 11570 (516) 766-2100
195 Rockaway Avenue, Valley Stream, NY 11580 (516) 872-0400

SUFFOLK
356 Middle Country Road, Coram, NY 11727 (516) 732-8300
155 East Main Street (Rt. 25A), Huntington, NY 11743 (516) 549-0800
143 Alexander Avenue, Lake Grove, NY 11755 (516) 724-3400
o 46 E. Hoffman Avenue (Waldbaum's), Lindenhurst, NY 11757 (516) 226-3777
* 62 South Ocean Avenue, Patchogue, NY 11772 (516) 447-3400
366 Route 25A, Rocky Point, NY 11778 (516) 744-0100
800 Montauk Highway, Shirley, NY 11967 (516) 281-2200
43 Main Street, Westhampton Beach, NY 11978 (516) 288-3300
o 1730 Veterans Memorial Highway (Edward's), Islandia, NY 11722 (516) 232-6900

LOAN CENTERS
One Depot Plaza, Mamaroneck, NY 10543 (914) 698-4200
241-02 Northern Boulevard, Douglaston, NY 11362 (718) 631-2500

TELEBANKING
24 Hour Banking By Phone (718) 726-HOME (4663)
(516) 827-HOME (4663)

OPERATIONS CENTER
* 100 Jericho Quadrangle, Jericho, NY 11753 (516) 733-5000

* Loan Centers at these locations
o Supermarket branch

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At September 30, 1996 there were 2,141 holders of record of common stock.

The following table shows high and low closing sales prices as reported by the
American Stock Exchange through June 20, 1995 and by the New York Stock Exchange
thereafter. Such prices do not necessarily reflect retail markups, markdowns or
commissions.

Fiscal year ended September 30, 1996 Fiscal year ended September 30, 1995
------------------------------------ ---------------------------------------
Cash Cash
Dividends Dividends
High Low Per Share High Low Per Share(1)
------- ------- ----------- ------- ------- ------------

4th Quarter $32.125 $25.750 $ .20 4th Quarter $20.750 $19.000 $ .20
3rd Quarter $26.125 $23.750 $ .20 3rd Quarter $20.375 $17.250 $ .20
2nd Quarter $23.500 $21.500 $ .20 2nd Quarter $19.125 $16.250 $ .20
1st Quarter $22.500 $19.750 $ .20 1st Quarter $19.625 $18.250 $ .20
(1) Dividends per share have not been restated for the merger with
Hamilton.