Forward Looking Statements

Certain statements contained herein are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar

terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.

The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake and specifically declines any obligation to publicly release the result of any revisions, which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Critical Accounting Policies

The calculation of the allowance for loan losses is a critical accounting policy of the Company. The allowance for loan losses is a valuation account that reflects management's evaluation of the probable losses in the loan portfolio. The Company maintains the allowance for loan losses through provisions for loan losses that are charged to income. Charge-offs against the allowance for loan losses are taken on loans where management determines that the collection of loan principal is unlikely. Recoveries made on loans that have been charged-off are credited to the allowance for loan losses.

The Company's evaluation of the adequacy of the allowance for loan losses includes a review of all loans on which the collectibility of principal may not be reasonably assured. For residential mortgage and consumer loans, this is determined primarily by delinquency and collateral values. For commercial real estate and commercial loans, an extensive review of financial performance, payment history and collateral values is conducted on a quarterly basis.

As part of the evaluation of the adequacy of the allowance for loan losses, each quarter management prepares a worksheet. This worksheet categorizes the entire loan portfolio by certain risk characteristics such as loan type (residential mortgage, commercial mortgage, construction, commercial, etc.) and loan risk rating.

When assigning a risk rating to a loan, management utilizes a nine-point internal risk rating system. Loans deemed to be of "acceptable quality" are rated 1 through 4, with a rating of 1 established for loans with minimal risk. Loans deemed to be of "questionable quality" are rated 5 (watch) or 6 (special mention). Loans with adverse classifications (substandard, doubtful or loss) are rated 7, 8 or 9, respectively. Commercial mortgage, commercial and construction loans are rated individually and each lending officer is responsible for risk rating loans in their portfolio. These risk ratings are then reviewed by the department manager and/or the Chief Lending Officer and the Credit Administration Department. Risk ratings are then confirmed by the Loan Review Department. Loans requiring Credit Committee approval are periodically reviewed by the Credit Committee in the credit renewal or approval process.

Management believes the primary risks inherent in the portfolio are a continued decline in the economy, generally, a continued decline in real estate market values, and possible increases in interest rates. Any one or a combination of these events may adversely affect borrowers' ability to repay the loans, resulting in increased delinquencies, loan losses and future levels of provisions. Accordingly, the Company has provided for loan losses at the current level to address the current risk in its loan portfolio. Management

considers it important to maintain the ratio of the allowance for loan losses to total loans at an acceptable level given current economic conditions, interest rates and the composition of the portfolio.

Although management believes that the Company has established and maintained the allowance for loan losses at adequate levels, additions may be necessary if future economic and other conditions differ substantially from the current operating environment. Management evaluates its estimates and assumptions on an ongoing basis giving consideration to historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Such estimates and assumptions are adjusted when facts and circumstances dictate. Illiquid credit markets, volatile securities markets, and declines in the housing market and the economy generally have combined to increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. In addition, various regulatory agencies periodically review the adequacy of the Company's allowance for loan losses as an integral part of their examination process. Such agencies may require the Company to recognize additions to the allowance or additional write-downs based on their judgments about information available to them at the time of their examination. Although management uses the best information available, the level of the allowance for loan losses remains an estimate that is subject to significant judgment and short-term change.

Additional critical accounting policies relate to judgments about other asset impairments, including goodwill, investment securities and deferred tax assets. Goodwill is evaluated for impairment on an annual basis, or more frequently if events or changes in circumstances indicate potential impairment between annual measurement dates. The Company engages an independent third party to perform an annual analysis during the fourth quarter as of September 30 to test the aggregate balance of goodwill for impairment. For purposes of goodwill impairment evaluation, the Bank is identified as the reporting unit. The fair value of goodwill is determined in the same manner as goodwill recognized in a business combination and uses standard valuation methodologies. Fair value may be determined using market prices, comparison to similar assets, market multiples, discounted cash flow analysis and other factors. Estimated cash flows may extend far into the future and by their nature are difficult to determine over an extended time frame. Factors that may significantly affect the estimates include specific industry or market sector conditions, changes in revenue growth trends, customer behavior, competitive forces, cost structures and changes in discount rates.

The goodwill impairment test is performed in two steps. The first step compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. However, if the carrying amount of the reporting unit exceeds its fair value, an additional test must be performed. The second step test compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. An impairment loss would be recorded to the extent that the carrying amount of goodwill exceeds its implied fair value.

As previously reported in the Company's Annual Report on Form 10-K for the year ended December 31, 2008, the Company performed an annual goodwill impairment test at September 30, 2008, and a subsequent test at December 31, 2008. The results of both analyses indicated that goodwill was not impaired. As a result of the continued decline in the first quarter of 2009 in stock prices in the financial services sector and in the Company's common stock price, the Company initiated a goodwill impairment test as of March 31, 2009. The step one analysis at March 31, 2009, indicated potential impairment. Upon completion of the second step test, it was determined that the carrying amount of the goodwill exceeded its implied fair value and an impairment charge in the amount of $152.5 million was recognized as of March 31, 2009. No goodwill impairment loss was required to be recognized for the three months ended March 31, 2008.

The Company's available for sale securities portfolio is carried at estimated fair value, with any unrealized gains or losses, net of taxes, reported as accumulated other comprehensive income or loss in stockholders'

equity. Estimated fair values are based on market quotations or matrix pricing as discussed in Note 6 to the unaudited consolidated financial statements. Securities which the Company has the positive intent and ability to hold to maturity are classified as held to maturity and carried at amortized cost. The Company conducts a periodic review and evaluation of the securities portfolio to determine if any declines in the fair values of securities are other than temporary. If such a decline were deemed other than temporary, the Company would write down the security to fair value through a charge to current period operations. The market value of the securities portfolio is significantly affected by changes in interest rates. In general, as interest rates rise, the market value of fixed-rate securities decreases and as interest rates fall, the market value of fixed-rate securities increases. The current turmoil in the credit markets, primarily as a result of the continued fallout from sub-prime lending, has resulted in a lack of liquidity in the mortgage-backed securities market. Increases in delinquencies and foreclosures, primarily in securities that are backed by sub-prime loans, have resulted in limited trading activity and significant price declines, regardless of favorable movements in interest rates. The Company evaluates its intent and ability to hold securities to maturity or for a sufficient period of time to recover the recorded principal balance. The Company also has investments in common stock issued by several publicly-traded financial institutions, the valuation of which is affected by the institutions' performance and market conditions. No securities impairment loss was required to be recognized for the three months ended March 31, 2009 or 2008.

The determination of whether deferred tax assets will be realizable is predicated on estimates of future taxable income. Such estimates are subject to management's judgment. A valuation allowance is established when management is unable to conclude that it is more likely than not that it will realize deferred tax assets based on the nature and timing of these items.

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2009 AND DECEMBER 31, 2008

Total assets at March 31, 2009 decreased $24.8 million, or 0.4%, to $6.52 billion, compared to $6.55 billion at December 31, 2008, primarily as a result of the decrease in intangible assets resulting from the goodwill impairment charge of $152.5 million, partially offset by an increase in cash and cash equivalents resulting from deposit inflows and sales and repayments of loans. Cash and cash equivalents increased $235.8 million to $304.3 million at March 31, 2009, from $68.5 million at December 31, 2008. At quarter-end, these balances were pending redeployment to fund loan originations, investment purchases and the repayment of maturing borrowings.

Securities available for sale, at fair value, increased $65.5 million, or 8.0%, to $885.8 million at March 31, 2009, compared to $820.3 million at December 31, 2008. The increase in the securities available for sale portfolio included $84.9 million of residential mortgage loan pools that were securitized by the Company and are now held as securities available for sale. The weighted average life of the Company's available for sale securities portfolio was 2.8 years at March 31, 2009.

Federal Home Loan Bank stock decreased $7.7 million, or 17.9%, to $35.2 million at March 31, 2009, compared to $42.8 million at December 31, 2008. The Company invests in stock of the Federal Home Loan Bank of New York ("FHLB-NY") as required under the terms of membership. The level of required stock holdings is dependent, in part, on outstanding borrowings by the Company from the FHLB-NY.

Total net loans at March 31, 2009, decreased $156.0 million, or 3.5%, to $4.32 billion, compared to $4.48 billion at December 31, 2008, largely as a result of the securitization of $84.9 million of conforming one- to four-family residential mortgage loans. Loan originations totaled $268.9 million and loan purchases totaled $12.9 million for the quarter ended March 31, 2009. Net increases of $34.9 million in commercial and multi-family mortgage loans were more than offset by decreases of $135.0 million in residential mortgage loans, $22.8 million in commercial loans, $14.2 million in consumer loans, and $13.1 million in construction loans during the first quarter of 2009. Commercial loans, consisting of commercial real estate, construction and commercial loans, totaled $2.10 billion at March 31, 2009 and December 31, 2008, representing 48.1% of the loan portfolio at March 31, 2009, and 46.5% of the loan portfolio at December 31, 2008. The Company intends to continue to focus on the origination of commercial loans. Retail loans, which consist of

residential mortgage loans and consumer loans, such as fixed-rate home equity loans and lines of credit, totaled $2.27 billion and accounted for 51.9% of the loan portfolio at March 31, 2009, compared to $2.42 billion, or 53.5% of the portfolio at December 31, 2008.

At March 31, 2009, the allowance for loan losses totaled $52.4 million, or 1.20% of total loans, compared with $47.7 million, or 1.05% of total loans at December 31, 2008. Total non-performing loans were $63.8 million, or 1.46% of total loans at March 31, 2009, compared to $59.1 million, or 1.31% of total loans at December 31, 2008. Non-performing assets totaled $68.5 million, or 1.05% of total assets at March 31, 2009, compared to $62.6 million, or 0.96% of total assets at December 31, 2008.

Intangible assets decreased $153.8 million to $360.9 million at March 31, 2009, from $514.7 million at December 31, 2008. At March 31, 2009, the Company had goodwill totaling $346.3 million, compared to $498.8 million at December 31, 2008, resulting primarily from acquisitions completed in 2004 and 2007. U.S. generally accepted accounting principles require companies to perform an annual test for goodwill impairment. As previously reported in the Company's Annual Report on Form 10-K for the year ended December 31, 2008, the Company performed an annual goodwill impairment test at September 30, 2008, and a subsequent test at December 31, 2008. The results of both analyses indicated that goodwill was not impaired. As a result of the continued decline in the first quarter of 2009 in stock prices in the financial services sector and in the Company's common stock price, the Company initiated a goodwill impairment test as of March 31, 2009, indicating that goodwill resulting from these acquisitions was impaired. The Company recognized a $152.5 million goodwill impairment charge for the quarter ended March 31, 2009.

Total deposits increased $290.5 million, or 6.9%, to $4.52 billion at March 31, 2009, from $4.23 billion at December 31, 2008, with core deposits increasing $134.1 million and time deposits increasing $156.4 million. Core deposits, consisting of all demand and savings deposits, represented 62.6% of total deposits at March 31, 2009, compared to 63.7% of total deposits at December 31, 2008. Within core deposits, money market account balances increased $63.5 million, to $820.3 million at March 31, 2009, NOW checking account balances increased $44.0 million, to $646.3 million at March 31, 2009, savings account balances increased $18.1 million, to $890.4 million at March 31, 2009 and non-interest bearing demand deposit accounts increased $8.6 million, to $470.9 million at March 31, 2009. These increases are primarily due to increases in municipal money market and checking account balances, Smart checking and Platinum relationship checking and money market account balances, and business checking account balances. Time deposit increases were primarily in the 18-month and shorter maturity categories.

Total stockholders' equity decreased $146.6 million, or 14.4%, to $872.0 million at March 31, 2009. This decrease was due to a net loss of $143.6 million, $6.6 million in cash dividends, and common stock purchases of $60,000, partially offset by $2.6 million in other comprehensive income and the allocation of shares to stock-based compensation plans of $1.1 million. At March 31, 2009, book value per share and tangible book value per share were $14.57 and $8.54, respectively, compared with $17.09 and $8.45, respectively, at December 31, 2008. Common stock repurchases during the quarter ended March 31, 2009, totaled 5,000 shares at an average cost of $11.36 per share. At March 31, 2009, 2.1 million shares remained eligible for repurchase under the current stock repurchase program authorized by the Company's Board of Directors.

Liquidity and Capital Resources. The Company's primary sources of funds are deposits, FHLB-NY advances, repurchase agreements, loan repayments, maturities of investments and cash flows from mortgage-backed securities. Scheduled loan amortization is a fairly predictable source of funds, while loan and mortgage-backed securities prepayments and deposit flows are influenced by interest rates, local economic conditions and the competitive marketplace. Additional sources of liquidity that are available to the Company, should the need arise, are a $100.0 million overnight line of credit and a $100.0 million one-month overnight repricing line of credit, each with the FHLB-NY. As of March 31, 2009, the Company did not have any outstanding borrowings against these lines of credit.

Cash needs for the three months ended March 31, 2009, were provided for primarily from deposit inflows, income and principal payments on loans, investments and mortgage-backed securities. The cash was used primarily to fund interest and operating expenses, current loan originations, common stock repurchases and the repayment of borrowings.

As of March 31, 2009, the Bank exceeded all minimum regulatory capital requirements as follows:

                                                       At March 31, 2009
                                                Required               Actual
                                             Amount     Ratio      Amount     Ratio
                                                    (Dollars in thousands)
       Regulatory Tier 1 leverage capital   $ 246,601    4.00 %   $ 403,452    6.54 %
       Tier 1 risk-based capital              163,761    4.00       403,452    9.85
       Total risk-based capital               327,523    8.00       454,642   11.10

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND
2008

General. The Company reported a net loss of $143.6 million for the three months ended March 31, 2009, compared to net income of $10.7 million for the same period in 2008. Basic and diluted losses per share were $2.56 for the quarter ended March 31, 2009, compared with basic and diluted earnings per share of $0.19 for the same quarter in 2008. Due to the continued decline in the first quarter of 2009 in stock prices in the financial services sector and in the Company's common stock price, the Company recognized a $152.5 million, or $2.72 per share goodwill impairment charge during the quarter ended March 31, 2009. Compared with the three months ended March 31, 2008, earnings and per share data for the three months ended March 31, 2009 also reflect an increase to the provision for loan losses due to the following: an increase in non-performing loans; growth in the loan portfolio; an increase in commercial loans as a percentage of the loan portfolio; and the impact of current macroeconomic conditions. The provision for loan losses was $5.8 million for the three months ended March 31, 2009, compared with $1.3 million for the same period in 2008. Earnings and per share data for the three months ended March 31, 2009 also include severance costs totaling $320,000, net of tax.

First quarter 2008 results were favorably impacted by a $180,000 net after-tax gain recorded in connection with the ownership and mandatory redemption of a portion of the Company's Class B Visa, Inc. shares as part of Visa's initial public offering, and a $175,000 net after-tax gain resulting from the sale of the deposits of a branch office.

Net Interest Income. Total net interest income increased $4.7 million, or 12.1%, to $43.9 million for the quarter ended March 31, 2009, compared to $39.2 million for the quarter ended March 31, 2008. Interest income for the first quarter of 2009 decreased $3.2 million, or 4.2%, to $73.5 million, compared to $76.7 million for the same period in 2008. Interest expense decreased $7.9 million, or 21.2%, to $29.5 million for the quarter ended March 31, 2009, compared to $37.5 million for the quarter ended March 31, 2008.

The Company's net interest margin increased 23 basis points to 3.10% for the quarter ended March 31, 2009, compared to 2.87% for the quarter ended March 31, 2008. The net interest margin for the quarter ended March 31, 2009, decreased 10 basis points from the trailing quarter net interest margin of 3.20%. The net interest spread was 2.82% for the quarter ended March 31, 2009, compared with 2.91% for the trailing quarter and 2.49% for the same period in 2008. The increase in the net interest margin for the three months ended March 31, 2009, versus the same quarter in 2008, was primarily attributable to decreases in market rates on interest-bearing liabilities. The decline in the net interest margin for the three months ended March 31, 2009, versus the trailing quarter was attributable to reductions in earning asset yields, an increase in the average balance of lower-yielding short-term investments and an increase in the average balance of non-performing loans.

The average yield on interest-earning assets decreased 42 basis points to 5.21% for the quarter ended March 31, 2009, compared to 5.63% for the comparable quarter in 2008. Compared to the trailing quarter, the yield on interest-earning assets decreased 17 basis points from 5.38%.

The average cost of interest-bearing liabilities decreased 75 basis points to 2.39% for the quarter ended March 31, 2009, compared to 3.14% for the quarter ended March 31, 2008. Compared to the trailing quarter, the average cost of interest-bearing liabilities decreased 8 basis points from 2.47%.

The average balance of net loans increased $125.3 million, or 3.0%, to $4.36 billion for the quarter ended March 31, 2009, compared to $4.24 billion for the same period in 2008. Income on all loans secured by real estate decreased $782,000, or 1.9%, to $40.6 million for the three months ended March 31, 2009, compared to $41.4 million for the three months ended March 31, 2008. Interest income on commercial loans decreased $784,000, or 6.9%, to $10.5 million for the quarter ended March 31, 2009, compared to $11.3 million for the quarter ended March 31, 2008. Consumer loan interest income decreased $1.5 million, or 15.5%, to $8.2 million for the quarter ended March 31, 2009, compared to $9.7 million for the quarter ended March 31, 2008. The average loan yield for the three months ended March 31, 2009, was 5.48%, compared with 5.90% for the same period in 2008, reflecting declines in short-term interest rates and the composition of the commercial loan portfolio, which is 48% floating or adjustable rate.

Interest income on investment securities held to maturity decreased $204,000, or 5.6%, to $3.4 million for the quarter ended March 31, 2009, compared to $3.7 million for the quarter ended March 31, 2008. Average investment securities held to maturity totaled $343.4 million for the quarter ended March 31, 2009, compared with $355.4 million for the same period last year.

Interest income on securities available for sale increased $424,000, or 4.1%, to $10.7 million for the quarter ended March 31, 2009, compared to $10.3 million for the quarter ended March 31, 2008. Average securities available for sale were $893.3 million for the three months ended March 31, 2009, compared with $788.2 million for the same period in 2008. The average yield on all securities was 4.31% for the three months ended March 31, 2009, compared with 4.67% for the same period in 2008. The decrease in the yield on securities available for sale for the three months ended March 31, 2009, compared with the same period in 2008, was attributable to the reinvestment of cash flows from sales, maturities and paydowns at lower market rates than those earned in the first quarter of 2008.

The average balance of interest-bearing core deposit accounts increased $141.8 million, or 6.7%, to $2.26 billion for the quarter ended March 31, 2009, compared to $2.11 billion for the quarter ended March 31, 2008. Average time deposit account balances decreased $17.4 million, or 1.1%, to $1.60 billion for the quarter ended March 31, 2009, compared to $1.61 billion for the same period in 2008. Interest paid on deposit accounts decreased $7.0 million, or 26.4%, to $19.6 million for the quarter ended March 31, 2009, compared to $26.6 million for the quarter ended March 31, 2008. The average cost of interest-bearing deposits was 2.06% for the three months ended March 31, 2009, compared with 2.87% for the three months ended March 31, 2008, reflecting recent interest rate reductions and a shift in deposit composition to lower-costing core deposit accounts.

Average borrowings increased $84.3 million, or 7.8%, to $1.16 billion for the quarter ended March 31, 2009, compared to $1.08 billion for the quarter ended March 31, 2008. Interest paid on borrowed funds decreased $927,000, or 8.5%, to $10.0 million for the quarter ended March 31, 2009, from the quarter ended March 31, 2008. The average cost of borrowings was 3.47% for the three months ended March 31, 2009, compared with 4.06% for the three months ended March 31, 2008.

Provision for Loan Losses. Provisions for loan losses are charged to operations in order to maintain the allowance for loan losses at a level management considers appropriate and adequate to absorb probable credit losses in the loan . . .