UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


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

         For the quarterly period ended December 31, 1999

                                       OR

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

         For the transition period from _______________ to ___________________

                        Commission file number 001-14910

                            GOUVERNEUR BANCORP, INC.
             (Exact name of registrant as specified in its charter)

               UNITED STATES                          04-3429966
      -------------------------------            -------------------
      (State or other jurisdiction of            (I.R.S. Employer
       incorporation or organization)            Identification No.)


                  42 Church Street, Gouverneur, New York 13642
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (315) 287-2600

         INDICATE BY CHECK MARK WHETHER THE  REGISTRANT  HAS FILED ALL DOCUMENTS
AND  REPORTS  REQUIRED  TO BE FILED  BY  SECTION  13 OR 15(D) OF THE  SECURITIES
EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER  PERIOD
THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT
TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES [ X ] NO [   ]

AS OF DECEMBER 31, 1999 THERE WERE 2,276,759 SHARES OUTSTANDING.

<PAGE>



                            GOUVERNEUR BANCORP, INC.
                                    FORM 10-Q
                                TABLE OF CONTENTS

PART 1 - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS - UNAUDITED

                  CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION AT DECEMBER 31,
                  1999 AND AT SEPTEMBER 30, 1999

                  CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED
                  DECEMBER 31, 1999 AND DECEMBER 31, 1998

                  CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND
                  COMPREHENSIVE INCOME FOR THREE MONTHS ENDED DECEMBER 31, 1999

                  CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS
                  ENDED DECEMBER 31, 1999 AND 1998

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS.

ITEM 3.           QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK


PART II - OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS

ITEM 2.           CHANGES IN SECURITIES AND USE OF PROCEEDS

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K


                                        2
<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS

         The financial  statements  presented in this Form 10-Q beginning on the
following  page  reflect the  consolidated  financial  condition  and results of
operations  of  Gouverneur  Bancorp,  Inc.  ("We"  or  the  "Company")  and  its
subsidiary  Gouverneur  Savings and Loan Association (the "Bank") for periods on
and after March 23, 1999.  Financial  statements  presented  for periods  before
March 23, 1999 are for the Bank.

                                        3
<PAGE>
<TABLE>
<CAPTION>
                     GOUVERNEUR BANCORP, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                           (In thousands) (Unaudited)

                                                               DECEMBER 31,   SEPTEMBER 30,
                                                                  1999            1999
                                                              ------------    ------------

ASSETS
<S>                                                           <C>             <C>
Cash and due from banks                                       $      1,322    $      1,564
Interest-bearing deposits with other financial institutions          1,548           1,926
Securities available-for-sale, at fair value                        12,630          12,971
Securities held-to-maturity (fair value of
 $5,552 at December 31, 1999 and $5,957 at
 September 30, 1999)                                                 5,637           6,019
Loans, net of deferred fees                                         49,697          46,791
Allowance for loan losses                                             (660)           (620)
                                                              ------------    ------------
Loans, net                                                          49,037          46,171
Premises and equipment, net                                            264             278
Federal Home Loan Bank stock, at cost                                  540             385
Accrued interest receivable                                            430             469
Real estate owned                                                      204             169
Other assets                                                            71              44
                                                              ------------    ------------
Total assets                                                  $     71,683    $     69,996
                                                              ============    ============
LIABILITIES
Deposits:  Demand accounts                                    $        427    $        184
           Savings and club accounts                                15,283          15,423
           Time certificates                                        22,424          23,057
           NOW and money market accounts                             5,984           6,449
                                                              ------------    ------------
Total  interest-bearing deposits                                    44,118          45,113
Advance payments by borrowers for property taxes
 and insurance                                                         364             151
Other liabilities                                                      843           1,303
Securities sold under agreements to repurchase                       8,300           5,900
Other Borrowings                                                     2,500           1,500
                                                              ------------    ------------
Total liabilities                                                   56,125          53,967
                                                              ------------    ------------

SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value per share;
 authorized 1,000,000 shares, issued: none                              --              --
Common stock, $.01 par value per share;
 authorized 9,000,000 shares, issued: 2,384,040 shares                  24              24
Additional paid in capital                                           4,553           4,553
Retained earnings                                                   11,619          11,470
Treasury Stock, 107,281 shares                                        (543)             --
Accumulated other comprehensive income                                 311             390
Unallocated  shares of Employee  Stock  Ownership Plan
 81,204 shares at 12/31/99 and 81,534 shares at 9/30/99               (406)           (408)
                                                              ------------    ------------
Total shareholders' equity                                          15,558          16,029
                                                              ------------    ------------
Total liabilities and shareholders' equity                    $     71,683    $     69,996
                                                              ============    ============

See accompanying notes to the consolidated financial statements.
</TABLE>

                                        4
<PAGE>

                     GOUVERNEUR BANCORP, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                (In thousands, except per share data) (Unaudited)


                                                    THREE MONTHS ENDED
                                                       DECEMBER 31,
                                             -----------------------------------
                                                  1999                 1998
                                             --------------       --------------
INTEREST INCOME
Loans                                        $        1,030       $          833
Securities                                              271                  280
Other short-term investments                             21                   29
                                             --------------       --------------
Total interest income                                 1,322                1,142

INTEREST EXPENSE
Deposits                                                455                  514
Borrowings                                              127                   --
                                             --------------       --------------
Total interest expense                                  582                  514
                                             --------------       --------------

Net interest income                                     740                  628
Provision for loan losses                                39                   33
                                             --------------       --------------
Net interest income after
 provision for loan losses                              701                  595

NON-INTEREST INCOME
Service charges                                          22                   16
Other                                                    42                   26
                                             --------------       --------------
Total non-interest income                                64                   42

NON-INTEREST EXPENSES
Salaries and employee benefits                          233                  200
Directors fees                                           20                   19
Building, occupancy and equipment                        58                   47
Data processing                                          27                   23
Postage and supplies                                     31                   18
Professional fees                                        50                   20
Deposit insurance premium                                 7                    6
Real estate owned                                         7                   22
Other                                                    87                   69
                                             --------------       --------------
Total non-interest expenses                             520                  424

Income before income tax expense                        245                  213

Income tax expense                                       96                   85
                                             --------------       --------------
                                             $          149       $          128
                                             ==============       ==============

BASIC EARNINGS PER SHARE (NOTE 3)                      0.07                  N/A

Weighted average shares outstanding               2,290,451                  N/A


See accompanying notes to the consolidated financial statements.

                                        5

<PAGE>
<TABLE>
<CAPTION>



                                           CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                                      AND COMPREHENSIVE INCOME
                                                     (In thousands) (Unaudited)

                                                                                  ACCUMULATED
                                                     ADDITIONAL                      OTHER
                                         COMMON       PAID IN      RETAINED      COMPREHENSIVE     TREASURY   UNALLOCATED
                                          STOCK       CAPITAL      EARNINGS          INCOME         STOCK        ESOP        TOTAL
                                      ------------ ------------- ------------ ------------------- ---------- ------------- ---------
Balance at
<S>       <C> <C>                     <C>          <C>           <C>          <C>                 <C>        <C>           <C>
September 30, 1999                    $        24  $       4,553 $     11,470 $               390 $       -- $       (408) $ 16,029


ESOP shares released or committed
to be released (330 shares)                                                                                             2         2

Treasury shares purchased  in stock
buy back (107,231 shares)                                                                               (543)                  (543)

Comprehensive income:
Change in net unrealized gain
(loss) on securities available for
sale, net of tax                                                                              (79)                              (79)

Net income                                                                149                                                   149
                                                                                                                            -------
Total comprehensive income                                                                                                       70
                                      ------------ ------------- ------------ ------------------- ---------- ------------  --------

Balance at December 31, 1999          $        24  $       4,553 $     11,619 $               311 $     (543)$       (406) $ 15,558
                                      ===========  ============= ============ =================== ========== ============  ========
</TABLE>

                                                                 6

<PAGE>
<TABLE>
<CAPTION>

                     GOUVERNEUR BANCORP, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASHFLOWS
                           (In thousands) (Unaudited)

                                                                     THREE MONTHS ENDED
                                                                        DECEMBER 31,
                                                             --------------------------------
                                                                 1999               1998
                                                             --------------    --------------
<S>                                                          <C>               <C>
OPERATING ACTIVITIES
Net Income                                                   $          149    $          128
Adjustments to reconcile net income to net cash
  used by operating activities:
Depreciation and amortization                                            17                17
Increase in accrued interest receivable                                  39                16
Provision for loan losses                                                39                33
Net amortization (accretion) of premiums/discounts                       14                 1
Allocation of ESOP shares                                                 2                --
Decrease in other liabilities                                          (428)             (495)
Increase in other assets                                                (27)              (85)
                                                             --------------    --------------

Net cash used by operating activities                                  (195)             (385)
                                                             --------------    --------------

INVESTING ACTIVITIES
Net increase in loans                                                (2,940)           (1,921)
Proceeds from maturities and principal reductions AFS                   389             1,000
Purchases of securities AFS                                            (172)           (1,510)
Purchases of securities HTM                                              --              (695)
Proceeds from maturities and principal reductions HTM                   381               806
Additions of premises and equipment                                      (3)              (10)
Purchase of FHLB stock                                                 (155)               --
                                                             --------------    --------------

Net cash used by investing activities                                (2,500)           (2,330)

FINANCING ACTIVITIES
Net increase (decrease) in deposits                                    (995)              724
Net increase in advance payments by borrowers
  for property taxes and insurance                                      213               209
Net proceeds from short-term borrowing                                3,400                --
Purchase of Treasury Stock shares                                      (543)               --
                                                             --------------    --------------

Net cash provided by financing activities                             2,075               933
                                                             --------------    --------------
</TABLE>

                                        7
<PAGE>

<TABLE>
<CAPTION>




                                                          THREE MONTHS ENDED
                                                              DECEMBER 31,
                                                    --------------------------------
                                                        1999                1998
                                                    --------------    --------------
<S>                                                                           <C>
Net decrease in cash and cash equivalents                     (620)           (1,782)
Cash and cash equivalents at beginning of period             3,490             4,434
                                                    --------------    --------------

Cash and cash equivalents at end of period          $        2,870    $        2,652
                                                    ==============    ==============

Supplemental disclosure of cash flow information:

Non-cash investing activities:
     Additions to real estate owned                             35                52
Cash paid during the period for:
     Interest                                                  531               514
     Income taxes                                               81               304
</TABLE>



See accompanying notes to consolidated financial statements.

                                        8
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.       BUSINESS

         Gouverneur  Bancorp,  Inc. (the Company) operates as a savings and loan
         holding  company.  Its only  subsidiary is Gouverneur  Savings and Loan
         Association (the Bank). The consolidated  financial  statements include
         the accounts of the Company and its wholly owned subsidiary,  the Bank.
         All  material   inter-company   accounts  and  transactions  have  been
         eliminated in this consolidation.

2.       BASIS OF PRESENTATION

         The  consolidated  financial  statements  included  herein  reflect all
         adjustments  which  are,  in the  opinion  of  management,  of a normal
         recurring   nature  and  necessary  to  present  fairly  the  Company's
         financial condition and results of operations.  The financial condition
         is presented as of December 31, 1999 and  September  30, 1999,  and the
         results of operations  are for the three month  periods ended  December
         31,  1999  and  1998.  The  statement  of   shareholders'   equity  and
         comprehensive  income is for the three months  ended  December 31, 1999
         and the  statements  of cash  flows  are for  the  three  months  ended
         December 31, 1999 and 1998.

3.       EARNINGS PER SHARE

         Basic earnings per share is calculated by dividing net income available
         to  common  shareholders  by the  weighted  average  number  of  shares
         outstanding  during the  period.  Prior to the mutual  holding  company
         reorganization of the Bank, which occurred on March 23, 1999,  earnings
         per share is not  applicable  as neither  the  Company nor the Bank had
         shares  outstanding.  Unallocated shares held by the Company's ESOP are
         not included in the weighted average number of shares outstanding.

4.       IMPACT OF NEW ACCOUNTING STANDARDS

         On October 1, 1998, the Company  adopted the provisions of Statement of
         Financial    Accounting   Standards   ("SFAS")   No.   130,   REPORTING
         COMPREHENSIVE   INCOME.  This  statement   establishes   standards  for
         reporting and display of  comprehensive  income and its components.  At
         the  Company,  comprehensive  income  represents  net income plus other
         comprehensive  income,  which  consists of the net change in unrealized
         gains  and  losses on  securities  available  for sale for the  period.
         Accumulated  other  comprehensive  income represents the net unrealized
         gains or  losses on  securities  available  for sale as of the  balance
         sheet  dates,  net of  related  tax  effect.  Prior  year  consolidated
         financial   statements  have  been   reclassified  to  conform  to  the
         requirements of SFAS 130.

                                       9
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

         We were  formally  chartered by the Office of Thrift  Supervision  (the
"OTS") on March 23,  1999.  On that date,  the Bank  completed a mutual  holding
company  reorganization so that it became our wholly owned  subsidiary.  We then
sold 45% of our  common  stock  (1,072,818  shares)  to the public for $5.00 per
share and issued 55% of our common stock  (1,311,222  shares) to Cambray  Mutual
Holding  Company  ("Cambray  MHC")  without any cash  payment.  Cambray MHC is a
mutual holding company also chartered by the OTS. As part of the reorganization,
the Bank contributed $100,000 to Cambray MHC as its initial capital. We received
$4.6 million of net proceeds from the sale of the stock. We used one-half of the
net proceeds to acquire all the Bank's common stock. We subsequently applied for
permission to repurchase up to 107,281 shares of our common stock,  representing
10% of the public  shares  outstanding.  We  received  approval  from the OTS on
November 10, 1999 and completed the purchase on December 22, 1999, at a price of
$5.00 per share plus commission.

         The Bank has been and  continues to be a community  oriented  financial
institution offering a variety of financial services. The Bank attracts deposits
from the general  public and uses those deposits  together with other funds,  to
make  loans and  other  investments.  Most of the  loans are one to four  family
residential mortgages. The Bank also makes consumer (including home equity lines
of credit),  commercial,  and multi-family  real estate and other loans. Most of
the loans are in the Bank's primary market area,  which is southern St. Lawrence
and northern  Jefferson and Lewis counties in New York State. The Bank's deposit
accounts are insured by the Savings  Association  Insurance Fund ("SAIF") of the
Federal  Deposit  Insurance  Corporation  ("FDIC"),  and the Bank is  subject to
regulation by the FDIC and the OTS.

         Our  profitability  depends,  to a large  extent,  on our net  interest
income,  which is the difference between the interest we receive on our interest
earning  assets,  such as loans  and  investments,  and the  interest  we pay on
interest bearing liabilities. Other categories of expenses generally include the
provision for loan losses, salaries and employee benefits costs, net expenses on
real estate  owned and various  categories  of  operational  expenses.  External
factors,  such as general  economic  and  competitive  conditions,  particularly
changes in  interest  rates,  government  policies  and  actions  of  regulatory
authorities, can have a substantial effect on profitability.


ANALYSIS OF NET INTEREST INCOME

         Net interest income, the Bank's primary income source, depends upon (i)
the amount of interest-earning  assets that the Bank can maintain based upon its
funding  sources;  (ii) the relative amounts of  interest-earning  assets versus
interest-bearing liabilities; and (iii) the difference between the yields earned
on those assets and the rates paid on those  liabilities.  Non-performing  loans
adversely  affect  net  interest  income  because  they must  still be funded by
interest-bearing   liabilities,   but  they  do  not  provide  interest  income.
Furthermore,  when the Bank designates an asset as non-performing,  all interest
which has been accrued but not actually received is deducted from current period
income, further reducing net interest income.

                                       10
<PAGE>

AVERAGE BALANCES, INTEREST RATES AND YIELDS

         The following table presents,  for the periods  indicated,  the average
interest-earning  assets and average  interest-bearing  liabilities by principal
categories,  the interest income or expense for each category, and the resultant
average  yields earned or rates paid. No tax equivalent  adjustments  were made.
All average balances are daily average balances.  Non-interest-bearing  checking
accounts  are  included  in the tables as a  component  of  non-interest-bearing
liabilities.

<TABLE>
<CAPTION>

                                                                  FOR THE THREE MONTHS ENDED DECEMBER 31,
                                                              -----------------------------------------------
                                                               1999                                     1998
                                              ---------------------------------------------------------------------------------
                                                                              Average                                  Average
                                                  Average                     Yield/      Average                       Yield/
                                                  Balance    Interest        Cost (6)     Balance     Interest        Cost (6)
                                                  -------    --------        --------     -------     --------        --------
<S>                                              <C>          <C>               <C>      <C>             <C>             <C>
Loans (1)                                     $    47,565    $  1,030           8.59%    $ 36,119     $    833           9.15%
Securities (2)                                     18,521         271           5.81%      18,437          280           6.03%
Other short-term investments                        1,628          21           5.12%       2,380           29           4.83%
                                              -----------------------     ------------------------------------           ----
  Total interest-earning assets                    67,714       1,322           7.75%      56,936        1,142           7.96%
Non-interest-earning assets                         3,000                                   3,250
                                              -----------                                --------
  Total assets                                $    70,714                                $ 60,186
                                              ===========                                ========


Savings and club accounts (3)                 $    15,567    $    137           3.49%    $ 17,472     $    154           3.50%
Time certificates                                  22,447         288           5.09%      23,681          333           5.58%
Money market and NOW accounts                       6,193          30           1.92%       5,764           27           1.86%
Borrowings                                          8,924         127           5.65%          --           --           0.00%
                                              -----------------------     ------------------------------------           ----
  Total interest-bearing liabilities               53,131         582           4.35%      46,917          514           4.35%

Non-interest-bearing liabilities                    1,511                                   1,716
                                              -----------                                --------
  Total liabilities                                54,642                                  48,633
Equity                                             16,072                                  11,553
                                              -----------                                --------
  Total liabilities and equity                $    70,714                                $ 60,186
                                              ===========                                ========
Net interest income/spread (4)                               $    740           3.40%                 $    628           3.61%
                                                             ========     ==========                  ========           ====

Net earning assets/net interest margin (5)    $    14,583                       4.34%    $ 10,019                        4.38%
                                              ===========                 ==========     ========                        ====

Ratio of average interest-earning assets
  to average interest-bearing liabilities                        1.27x                                    1.21x
                                                             ========                                 ========
</TABLE>

                                       11

                                                 NOTES APPEAR ON FOLLOWING PAGE.
<PAGE>

(1)    Shown net of the allowance for loan losses. Average loan balances include
       non-accrual loans. Interest is recognized on non-accrual loans only as
       and when received.
(2)    Securities are included at amortized cost, with net unrealized gains or
       losses on securities available for sale included as a component of
       non-earning assets. Securities include Federal Home Loan Bank of New York
       stock.
(3)    Includes advance payments by borrowers for taxes and insurance (mortgage
       escrow deposits).
(4)    The spread represents the difference between the weighted-average yield
       on interest-earning assets and the weighted-average cost of
       interest-bearing liabilities.
(5)    The net interest margin, also known as the net yield on average
       interest-earning assets, represents net interest income as a percentage
       of average interest-earning assets.
(6)    Yields and related ratios for the three-month period have been annualized
       when appropriate.


RATE/VOLUME ANALYSIS OF NET INTEREST INCOME

         One method of analyzing net interest  income is to consider how changes
in average  balances  and  average  rates from one period to the next affect net
interest  income.  The  following  table shows  changes in the dollar  amount of
interest income and interest  expense for major  components of  interest-earning
assets and  interest-bearing  liabilities.  It shows the amount of the change in
interest  income or expense  caused by either  changes in  outstanding  balances
(volume)  or  changes  in  interest  rates.  The effect of a change in volume is
measured by  applying  the  average  rate during the first  period to the volume
change  between  the two  periods.  The effect of changes in rate is measured by
applying the change in rate between the two periods to the average volume during
the first period.  Changes attributable to both rate and volume, which cannot be
segregated,  have been allocated proportionately to the change due to volume and
change due to rate.

                                                     Three Months Ended
                                                        December 31,
                                                        1999 vs. 1998
                                              --------------------------------
                                                  Increase (Decrease) Due to:
(In Thousands)                                  Volume      Rate        Total
                                              --------     ------      -------
INTEREST-EARNING ASSETS:
Loans                                         $   251      $ (54)      $  197
Securities                                          1        (10)          (9)
Other short-term investments                      (10)         2           (8)
                                              -------      -----       ------
Total interest-earning assets                     (62)       242          180
                                              =======      =====       ======

INTEREST-BEARING LIABILITIES:
Savings and club accounts                         (17)        --          (17)
Time certificates                                 (17)       (28)         (45)
NOW and money market accounts                       2          1            3
Borrowings                                        127          -          127
                                              -------      -----       ------
Total interest-bearing liabilities                 95        (27)          68
                                              =======      =====       ======

Net change in net interest income             $   147      $ (35)      $  112
                                              =======      =====       ======

                                       12
<PAGE>

COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 1999 AND SEPTEMBER 30, 1999.

         During the three months from  September  30, 1999 through  December 31,
1999, we increased our loan portfolio by $2.9 million.  This increase was mainly
due to an increase of $1.3  million in  automobile  loans,  $1.1 million in real
estate loans and $0.3 million in commercial  loans.  Total assets increased $1.7
million from $70.0  million at September  30, 1999 to $71.7  million at December
31, 1999.  Scheduled  principal and interest  payments from our  mortgage-backed
securities  and new  borrowings  of $3.4 million from the Federal Home Loan Bank
were used to fund the additional loans. Our borrowings stood at $10.8 million on
December 31, 1999. We experienced a decrease in deposits of  approximately  $1.0
million,  or 2.2% during the quarter.  We believe this decrease  resulted from a
combination of factors. Some of the decrease can be attributed to normal run-off
during  the  holiday  season.   Additionally,   we  have  experienced  increased
competition  for deposits as other financial  institutions  have offered special
rates on certificates of deposit. High yields on equity investments in the stock
markets has also made it more  difficult for us to maintain our deposit  levels.
Year 2000 concerns may have contributed to this decrease in deposits,  but we do
not believe that this was a major  factor.  We will offer special CD programs in
future months to help bolster our deposits.

         During the three months from  September  30, 1999 through  December 31,
1999,  we continued to  experience  strong demand for our loan products and were
able to increase our loan portfolio and place available funds into loans,  which
are higher  yielding  assets  than  securities.  The  increase  of $2.9  million
represents  a 6.2%  increase in loans,  while  total  assets  increased  by $1.7
million, or 2.4%.

         Our  shareholders'  equity declined  $471,000  during the quarter.  The
decline  was  primarily  caused buy our stock  buyback  program,  which  reduced
shareholders'  equity  by  $543,000.  We also  had a  $79,000  decline  in other
comprehensive  income because of a decline in the market value of our securities
portfolio due to rising  interest  rates.  On the positive  side,  shareholders'
equity  increased  by our net  income of  $149,000  during the  quarter.  We are
considering requesting OTS permission for additional stock buybacks, which could
have the effect of reducing  shareholders'  equity but increasing book value per
share if our stock  price  remains at current  levels,  which is below per share
book value.

COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 1999
AND 1998.

         GENERAL.  Our net income for the three months  ended  December 31, l999
was $149,000, an increase of $21,000, or 16.4%, over our net income for the same
period  last year.  The  primary  reason for the  increase  in net income was an
increase in net interest  income  caused by the  increase in our loan  portfolio
over  the past  year.  Net  interest  income  increased  by  $112,000.  However,
increases in deferred fees expense  associated  with the increase in loans,  and
increases in non-interest  expenses,  primarily  professional fees, salaries and
employee benefits expense and income taxes,  offset a portion of the increase in
net interest income.

         INTEREST INCOME. Interest income increased $180,000, or 15.8%, from the
three  months ended  December  31, 1998 to the three  months ended  December 31,
1999. We generated the increase  almost  entirely as a result of increasing  our
average level of interest-earning  assets over the past twelve months from $56.9
million for the 1998 quarter to $67.7 million for the 1999 quarter. The increase
was composed of an $11.4 million  increase in the average  balance of loans,  an
increase in the average  balance in investment  securities of $0.1 million and a
decrease of $0.7 million in other short-term  investments.  We accomplished this
increase in loans through the active solicitation of new loans and the hiring of
additional loan origination staff.

                                       13
<PAGE>
         The average interest rate we earned on our interest-earning  assets was
21 basis points  (0.21%.) lower in this year's quarter than last year,  with the
average rate earned on loans  decreasing by 56 basis points and the average rate
earned on securities  decreasing by 22 basis points.  The average rate we earned
on  loans  decreased  for a  couple  of  reasons.  First,  in  response  to  our
competition, we offered mortgage loans in which the borrower did not pay closing
costs.  These costs are amortized  over the life of the  mortgage,  although the
mortgagee  is  responsible  for the costs if the mortgage is paid off during the
initial five years.  The amortization of these costs is reflected as a reduction
of  loan  interest  income.  Second,  we  are  originating  more  variable  rate
residential  mortgages,  which  have a  lower  starting  rate  than  fixed  rate
mortgages. Finally, we have been originating more auto loans on new automobiles,
which have lower interest rates than loans on used autos.

         Loans are our  highest  yielding  asset  category.  The decline in loan
yields by 56 basis  points had a  substantial  negative  effect on our  interest
income.  However,  we reduced this effect by increasing loans as a percentage of
total interest-earning assets.

         The decrease in the average  rates earned on  securities  was caused in
part by the  addition  of  adjustable-rate  mortgaged-backed  securities  to the
portfolio  over  the  past  year,  which  have a lower  yield  than  fixed  rate
securities. The one-year adjustable-rate  mortgage-backed securities help reduce
the interest  rate  sensitivity  effects of our  long-term  fixed-rate  mortgage
portfolio.

         Overall,  we  estimate  that the  increase  in the  average  volume  of
interest-earning assets caused a $242,000 increase in interest income, while the
decrease in average  interest rates  resulted in a $62,000  decrease in interest
income for a net increase of $180,000 in interest income.

         INTEREST  EXPENSE.  Interest  expense  increased  $68,000  in the first
quarter of 1999  versus  1998.  We estimate  that  additional  interest  cost of
$95,000,  resulted  from an increase in the average  volume of  interest-bearing
liabilities  while a $27,000  reduction  in  interest  expense  was  caused by a
decrease in average rate we paid on certificates of deposit (CD's). The increase
in the volume of interest-bearing  liabilities was a result of our borrowings to
provide   funds  so  we  could  grow  our  assets.   The   average   balance  of
interest-bearing  deposits was $2.7 million less in the 1999 quarter compared to
1998. This was caused in part by the decline in deposits and in part by the fact
that deposits  during the 1998 quarter were higher  because they included  stock
subscriptions held pending completion of the Bank's reorganization.

         Our average cost of funds was 4.35% for both  quarters.  Borrowings are
usually the highest cost of funds,  so the increase in borrowings  increased our
cost of funds. However, we decreased the average rate we paid on certificates of
deposit due to market interest  rates.  These two factors  approximately  offset
each other.  In upcoming  months,  as we offer  special  certificate  of deposit
programs to  maintain  deposit  levels,  our cost of funds may  increase  due to
higher rates we must offer in those programs.

         NET INTEREST INCOME. The net effect of the increases in interest income
and interest  expense was a $112,000  increase in net interest  income.  Despite
this increase, our interest rate spread (the difference between the average rate
we earn and the  average  rate we pay)  decreased  by 21 basis  points  (0.21%).
However,  our net interest  margin only  decreased by 4 basis points to 4.34% in
1999, from 4.38% for the first quarter of 1998. Even though our spread decreased
by 21 basis points,  we held the reduction in our net interest margin to 4 basis
points because we used an additional  $4.5 million in average equity to grow our
interest-earning assets by $10.7 million, while our interest-bearing liabilities
only increased by $6.2 million.

         The average yield on our loans and  securities  portfolio  decreased as
discussed above. Although the decline in the rate earned on our interest-earning
assets declined by 21 basis points,  the average cost of funds remained the same
at 4.35%.  We continue  to offer  attractive  rates on our  deposit  products to
maintain  market share.  Our deposit  rates are generally  higher than the rates
offered by the two other local commercial banks,  except when they offer special
CD  promotions,  and comparable to or at the high end of rates offered by thrift
institutions throughout the region.

                                       14
<PAGE>

         Average capital  represented 23.7% of average  interest-earning  assets
for the quarter ended December 31, 1999,  while it represented  20.3% of average
interest-earning  assets  for the same  quarter  in 1998.  Our ratio of  average
interest-earning assets to average  interest-bearing  liabilities increased from
1.21 times in 1998 to 1.27 times in 1999.

         PROVISION FOR LOAN LOSSES.  The provision for loan losses  results from
our analysis of the  adequacy of the  allowance  for loan losses.  If we believe
that the allowance  should be higher,  then we increase it, with a provision for
loan losses  which is an expense on our income  statement.  Our  analysis of the
adequacy of the allowance is always speculative, based upon the inherent risk of
loss  in  the  current  loan   portfolio  and  our   assessment  of  how  future
circumstances  will  affect  the  ultimate  realization  of those  losses.  This
analysis  considers,  among other things,  default rates and the level of losses
when our customers do not repay their loans. Estimates of future events, such as
future  interest  rates,  the health of the local and  national  economy and the
effects of government  policies,  are also  components  of our analysis.  If our
predictions are inaccurate,  then increases in the allowance may be necessary in
future  periods  even if the  level  of our loan  portfolio  remains  the  same.
Furthermore,  the Office of Thrift  Supervision  may disagree with our judgments
regarding  the  potential  risks in our loan  portfolio  and could require us to
increase the allowance m the future.

         For the three months ended  December 31, 1999, we provided  $39,000 for
loan losses, compared to $33,000 in the same quarter last year. We increased the
provision  because of the increase in the size of our loan portfolio.  Our level
of non-accruing loans (generally loans past due 90 days or more) was $138,000 at
December 31, 1999  compared to $221,000 at September  30, 1999.  At December 31,
1999, our allowance was $660,000,  or 1.33% of total loans, compared to $620,000
or 1.33% of total loans at September 30, 1999. The $40,000 increase includes the
$39,000 provision and net recoveries of $1,000.

         NON-INTEREST  INCOME. Our non-interest income was $20,000 higher in the
1999 quarter versus the 1998 quarter. The increase was principally the result of
the increased size of our institution, which generated more transaction fees. We
have  continued  with our more rigorous  policies  regarding the  collection and
non-waiver of account-related charges.

         NON-INTEREST  EXPENSES.  Our non-interest expenses increased by $96,000
from the 1998 to the 1999 quarter. This increase was primarily due to additional
costs  of  $33,000  for  salaries  and  benefits  and  a  $30,000   increase  in
professional   fees  for  costs   associated   with  the  additional   reporting
requirements  of a public  company.  The balance of the  increase was due to the
growth in the size of the Bank and includes  expenses  associated  with the loan
production office opened in July 1999. At the end of the 1999, we had twenty-two
full-time  and one part-time  employees,  compared to eighteen full time and one
part-time  employees  at the end of  December  1998.  We have  begun to reap the
benefits  of the  increase  in staff as shown by the  increase  in loans and net
income. We believe that our current staff level can support  additional  growth.
We  also  believe  that  the  reorganization   caused  temporary   increases  in
professional  fees expense  which can be reduced by having our staff handle more
of the reporting requirements. This process has already started.

         INCOME TAX EXPENSE.  Our income tax expense  increased  by $11,000,  or
11.9%  comparing  the first  quarter of 1998 to the same  quarter  of 1999.  The
increased  expense  was the  result of higher net  income  before  income tax of
$32,000, or 15.0%.

                                       15
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

         Our primary sources of funds are deposits,  borrowings from the Federal
Home Loan Bank,  and proceeds from the principal and interest  payments on loans
and  securities.  Scheduled  maturities  and  principal  payments  on loans  and
securities  are  predictable  sources of funds.  We can also  control  the funds
available from borrowings.  However,  general  economic  conditions and interest
rate  conditions can cause  increases or decreases in deposit  outflows and loan
prepayments  which  can also  affect  the level of funds we have  available  for
investment.

         In general,  we manage our liquidity by maintaining a sufficient  level
of short-term  investments  so funds are regularly  available for  investment in
loans when needed.  During the three months ended  December 31, 1999, we reduced
our cash and cash  equivalents by $620,000.  We used this reduction,  along with
new  borrowings,  to funds  additional  loans. We originated $5.3 million of new
loans during the three months ended  December  31, 1999.  However,  loans,  net,
after  payments,  charge-offs  and transfers to real estate owned,  increased by
$2.9 million during the period.

         Deposits  decreased  by $1.0  million  during  the three  months  ended
December 31, 1999. As we discussed  above, we believe the decrease was primarily
caused by run-off during the holiday season and competitive  pressures from both
local banks and the stock  markets.  In addition to factors  within our control,
such as our deposit pricing strategies and our marketing efforts,  deposit flows
are affected by the level of general market interest rates,  the availability of
alternate  investment  opportunities,  general  economic  conditions,  and other
factors outside our control.

         We monitor our  liquidity  regularly.  Excess  liquidity is invested in
overnight  federal  funds  sold and  other  short-term  investments.  If we need
additional  funds,  we can borrow  those  funds,  although the cost of borrowing
money is normally  higher than the average cost of deposits.  As a member of the
Federal Home Loan Bank of New York,  the Bank can arrange to borrow in excess of
$18 million,  but to do so it must provide  appropriate  collateral  and satisfy
other requirements for Federal Home Loan Bank borrowings.  We have used borrowed
funds to help us leverage  capital we received from our stock sale, but have not
needed borrowings to cover liquidity shortfalls.  In addition to borrowings,  we
believe  that,  if we need  to do so,  we can  attract  additional  deposits  by
increasing the rates we offer.

         We had $907,000 in  outstanding  commitments  to make loans at December
31, 1999,  along with $490,000 of unused home equity,  commercial  and overdraft
lines of  credit.  We  anticipate  that we will  have  enough  funds to meet our
current loan  commitments  and to fund draws on the lines of credit  through the
normal turnover of our loan and securities portfolios.  At December 31, 1999, we
had $16.6 million of certificates of deposit scheduled to mature in one year. We
anticipate that we can retain  substantially all of those deposits if we need to
do so to fund  loans and other  investments  as part of our  efforts to grow and
leverage our new capital.

         The OTS has minimum capital ratio requirements which apply to the Bank,
but there are no comparable  minimum capital  requirements that apply to us as a
savings and loan holding  company.  At December 31, 1999,  the Bank exceeded all
regulatory capital requirements of the OTS applicable to it, with Tier I capital
of $13.9  million,  or 19.5% of average  assets and with  risk-based  capital of
$14.8  million,  or 39.5% of  risk-weighted  assets.  The Bank also had tangible
capital of $13.9  million,  or 19.5% of average  tangible  assets.  The Bank was
classified as "well capitalized" at December 31, 1999 under OTS regulations.

         OTS  regulations  require that the Bank maintain liquid assets equal to
4% of withdrawable accounts. This ratio is measured on a monthly basis. The Bank
had a liquidity ratio of 18.5% for December 31, 1999.

                                       16
<PAGE>
YEAR 2000 COMPLIANCE

         We did not  encounter  any  material  computer-related  problems in the
transition into Year 2000.

FORWARD-LOOKING STATEMENTS

         When we use words or phrases like "will probably  result," "we expect,"
"will  continue,"  "we  anticipate,"  "estimate,"  "project,"  "should cause" or
similar expressions in this 10-Q or in any press releases, public announcements,
filings with the Securities and Exchange Commission or other disclosures, we are
making  "forward-looking  statements"  as  described  in the Private  Securities
Litigation Reform Act of 1995. In addition,  certain information we will provide
in the  future on a regular  basis,  such as  analysis  of the  adequacy  of our
allowance  for loan losses or an analysis of interest  rate  sensitivity  of our
assets and liabilities,  is always based on predictions of the future. From time
to time,  we may  also  publish  other  forward-looking  statements  anticipated
financial performance, business prospects, and similar matters.

         The private  Securities  Litigation  Reform Act of 1995 provides a safe
harbor  for  forward-looking  statements.  We want you to know that a variety of
future events could cause our actual results and experience to differ materially
from what was anticipated in our forward-looking  statements.  Some of the risks
and uncertainties that that may affect our operations, performance,  development
and results,  the interest rate sensitivity of our assets and  liabilities,  and
the adequacy of our allowance for loan losses, include:

o        Local,  regional,  national or global economic  conditions  which could
         cause an increase in loan delinquencies, a decrease in property values,
         or a change in the housing turnover rate;

o        Changes  in  market  interest  rates or  changes  in the speed at which
         market interest rates change;

o        Changes in laws and regulations affecting us;

o        Changes in competition; and

o        Changes in consumer preferences.

         Please do not rely unduly on any forward-looking statements,  which are
valid only as of the date made. Many factors,  including those described  above,
could affect our  financial  performance  and could cause our actual  results or
circumstances for future periods to differ materially from what we anticipate or
project.  We have no  obligation  to update any  forward-looking  statements  to
reflect future events which occur after the statements are made.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         See  discussion  in our  Annual  Report on Form 10-K for the year ended
September  30,  1999.  We do not believe  that our  exposure  to  interest  rate
fluctuations has changed in a material way since September 30, 1999. We continue
to believe  that an  increase  in market  interest  rates  would have an adverse
effect on net income because the rates we pay on deposits and  borrowings  would
tend to adjust more quickly to market  interest  rates than the rates we earn on
loans and other investments.

                                       17
<PAGE>

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

         At a special  meeting of  stockholders  held on October 27,  1999,  the
stockholders of Gouverneur Bancorp,  Inc. approved two stock-based  compensation
plans, a the Stock Option Plan and the Management  Recognition Plan. The vote on
the two proposals was as follows:


                                                                   Management
                                           Stock Option Plan    Recognition Plan
                                           -----------------    ----------------
In favor (Public shares)                          545,734             543,469
In favor(Cambray Mutual Holding Company)        1,311,222           1,311,222
In favor (Total)                                1,856,956           1,854,691
Against                                           222,283             222,423
Abstain                                             2,965               5,090
Broker Non-vote                                      None                None


                                       18
<PAGE>

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         In the  ordinary  course  of  business,  the  Company  and the Bank are
subject to legal actions, which involve claims for monetary relief.  Management,
based on the advise of counsel,  does not believe that any currently known legal
actions,  individually  or in the aggregate,  will have a material effect on its
consolidated financial condition or result of operation.

Item 2.  Changes in Securities and Use of Proceeds

      None during the quarter ended December 31, 1999.

      Item 6.  Exhibits and Reports on Form 8-K

         (a)   Exhibits

               (3.1)  Federal  Stock  Charter of  Gouverneur  Bancorp,  Inc.  as
                      formally  issued by the  Office of Thrift  Supervision  on
                      March 23, 1999  (incorporated  by reference to Exhibit 3.2
                      to  the  pre-effective   amendment  no.  1  to  Gouverneur
                      Bancorp,  Inc.'s registration  statement on Form S-1 filed
                      on August 5, 1998 (File No. 333-57845)).

               (3.2)  Bylaws  of  Gouverneur  Bancorp,  Inc.   (incorporated  by
                      reference  to Exhibit 3.2 to the  pre-effective  amendment
                      no. 1 to Gouverneur Bancorp, Inc.'s registration statement
                      on Form S-1 filed in August 5, 1998 (File No, 333-57845)).

               (27)   Financial Data Schedule (included only in EDGAR filings).

         (b)   Reports on Form 8-K

         No  reports on Form 8-K have been filed  during the  quarter  for which
         this report is filed.

                                   SIGNATURES

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

                                            Gouverneur Bancorp, Inc.


         Date: February 3, 2000             By: /s/ RICHARD F. BENNETT
                                               ---------------------------------
                                                    Richard F. Bennett
                                                    President and Chief
                                                    Executive Officer
                                                   (principal executive officer
                                                    and officer duly authorized
                                                    to sign on behalf of the
                                                    registrant)

                                            By: /s/ ROBERT TWYMAN
                                               ---------------------------------
                                                    Robert Twyman
                                                    Chief Financial Officer

                                       19
<PAGE>

                                  EXHIBIT INDEX

      EXHIBIT
      NUMBER                        DESCRIPTION
      ------                        -----------

       3.1                          Federal Stock Charter of Gouverneur Bancorp,
                                    Inc.  as  formally  issued by the  Office of
                                    Thrift   Supervision   on  March  23,   1999
                                    (incorporated by reference to Exhibit 3.1 to
                                    the   pre-effective   amendment   no.  1  to
                                    Gouverneur   Bancorp,   Inc.`s  registration
                                    statement  on Form S-1  filed on  August  5,
                                    1998 (File No, 333-57845))

       3.2                          Bylaws   of   Gouverneur    Bancorp,    Inc.
                                    (incorporated by reference to Exhibit 3.2 to
                                    the   pre-effective   amendment   no,  1  to
                                    Gouverneur   Bancorp,   Inc.'s  registration
                                    statement  on Form S-1  filed on  August  5,
                                    1998 (File No, 333-57845))

       27                           Data Schedule  (included  only in
                                    EDGAR filings)

                                       20