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

                                   FORM 10-QSB


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

         For the quarterly period ended March 31, 2003

                                       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 small business issuer 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)

                    Issuer's telephone number (315) 287-2600

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]

                                                           Outstanding at
          Class                                            March 31, 2003
-----------------------------                              --------------
Common Stock, par value $ .01                                2,277,884

Transitional Small Business Disclosure Format (check one):
                                 Yes [ ] No [X]

<PAGE>

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



<TABLE>
<CAPTION>
PART 1 - FINANCIAL INFORMATION                                                                 Page
---------------------------------------------------------------------------------------------------
<S>               <C>                                                                           <C>
Item 1.           Financial Statements - Unaudited

                  Consolidated Statements of Financial Condition at March 31, 2003 and           3
                  September 30, 2002

                  Consolidated Statements of Income for the three and six months ended
                  March 31, 2003 and March 31, 2002.                                             4

                  Consolidated Statements of Shareholders' Equity for six months ended           5
                  March 31, 2003 and 2002

                  Consolidated Statements of Cash Flows for the six months ended                 7
                  March 31, 2003 and 2002

                  Notes to Consolidated Financial Statements                                     8

Item 2.           Management's Discussion and Analysis of Financial Condition and                11
                  Results of Operations.

Item 3.           Controls and Procedures                                                        20

PART II - OTHER INFORMATION
---------------------------

Item 1.           Legal Proceedings                                                              21

Item 4.           Submission of Matters to a Vote of Security Holders                            21

Item 6.           Exhibits and Reports on Form 8-K                                               22
</TABLE>

                                        2
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

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

<TABLE>
<CAPTION>

                                                                                      March 31,     September 30,
                                                                                        2003            2002
                                                                                     -----------    -----------
<S>                                                                                  <C>            <C>
Assets:
Cash and due from banks                                                              $     1,767    $     1,481
Interest-bearing deposits in bank                                                          2,601          1,566
                                                                                     -----------    -----------
                   Total cash and cash equivalents                                         4,368          3,047

Securities available-for-sale                                                             22,698         23,108
Securities held-to-maturity (fair value of $732 at March 31, 2003
  and $1,352 at September 30, 2002)                                                          729          1,341
Loans, net of deferred fees                                                               56,191         55,016
Less: allowance for loan losses                                                             (659)          (671)
                                                                                     -----------    -----------
                   Loans, net                                                             55,532         54,345

Accrued interest receivable                                                                  394            404
Federal Home Loan Bank stock, at cost                                                        635            745
Premises and equipment, net                                                                1,794          1,848
Other assets                                                                                 465            220
                                                                                     -----------    -----------
                   Total assets                                                      $    86,615    $    85,058
                                                                                     ===========    ===========
Liabilities:
Deposits:   Non-interest-bearing demand                                              $       646    $       779
            NOW and money market                                                           7,858          7,141
            Savings                                                                       17,907         15,821
            Time                                                                          28,582         29,020
                                                                                     -----------    -----------
                   Total deposits                                                         54,993         52,761
                                                                                     -----------    -----------

Securities sold under agreements to repurchase                                             6,200          6,900
Advances from the Federal Home Loan Bank of New York                                       6,500          6,500
Other liabilities                                                                          1,583          1,669
                                                                                     -----------    -----------
                   Total liabilities                                                      69,276         67,830
                                                                                     -----------    -----------
Shareholders' Equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized; none issued                     --             --
Common stock, $.01 par value, 9,000,000 shares authorized; 2,384,040 shares issued            24             24
Additional paid-in capital                                                                 4,555          4,570
Retained earnings                                                                         13,167         13,025
Accumulated other comprehensive income                                                       519            537
Unearned common stock held by Management Recognition Plan                                    (95)           (73)
Unallocated common stock held by Employee Stock Ownership Plan                              (294)          (312)
Treasury stock, at cost, 106,156 shares at March 31, 2003 and
    107,281 shares at September 30, 2002                                                    (537)          (543)
                                                                                     -----------    -----------
                   Total shareholders' equity                                             17,339         17,228
                                                                                     -----------    -----------
                   Total liabilities and shareholders' equity                        $    86,615    $    85,058
                                                                                     ===========    ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                        3
<PAGE>

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

<TABLE>
<CAPTION>
                                                       Three Months Ended         Six Months Ended
                                                            March 31,                 March 31,
                                                     -----------------------   -----------------------
                                                        2003         2002         2003         2002
                                                     ----------   ----------   ----------   ----------
<S>                                                  <C>          <C>          <C>          <C>
Interest income:
----------------
     Loans                                           $    1,132   $    1,151   $    2,219   $    2,322
     Securities                                             206          241          433          499
     Other short-term investments                             5            7           12           14
                                                     ----------   ----------   ----------   ----------
           Total interest income                          1,343        1,399        2,664        2,835

Interest expense:
-----------------
     Deposits                                               335          390          699          859
     Borrowings - short term                                 15           28           30           61
     Borrowings - long term                                 143          153          289          314
                                                     ----------   ----------   ----------   ----------
           Total interest expense                           493          571        1,018        1,234
                                                     ----------   ----------   ----------   ----------

           Net interest income                              850          828        1,646        1,601
     Provision for loan losses                               10           25           50           50
                                                     ----------   ----------   ----------   ----------
           Net interest income after provision for
                loan losses                                 840          803        1,596        1,551

Non-interest income:
--------------------
     Service charges                                         28           25           62           49
     Realized gain on sales of securities                    91           96           97           96
     Other                                                   32           15           55           47
                                                     ----------   ----------   ----------   ----------
           Total non-interest income                        151          136          214          192

Non-interest expenses
---------------------
     Salaries and employee benefits                         358          293          672          542
     Directors fees                                          25           33           48           34
     Occupancy and equipment                                 92           63          180          123
     Data processing                                         32           29           63           58
     Postage and supplies                                    44           27           71           52
     Professional fees                                       43           39           86           78
     Foreclosed assets, net                                   9           11           29           22
     Other                                                  110           88          226          159
                                                     ----------   ----------   ----------   ----------
           Total non-interest expenses                      713          583        1,375        1,068

           Income before income tax expense                 278          356          435          675

Income tax expense                                          108          140          167          266
                                                     ----------   ----------   ----------   ----------

      Net income                                     $      170   $      216   $      268   $      409
                                                     ==========   ==========   ==========   ==========

Earnings per common share - basic (Note 3)           $     0.08   $     0.10      $ 0. 12   $     0.19
Earnings per common share - diluted (Note 3)         $     0.08   $     0.10   $     0.12   $     0.18
</TABLE>

See accompanying notes to consolidated financial statements

                                        4
<PAGE>

                     GOUVERNEUR BANCORP, INC AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                         Six months ended March 31, 2003
                  (In thousands, except share data) (Unaudited)
<TABLE>
<CAPTION>

                                                                     Accumulated   Unearned   Unallocated
                                              Additional                Other       Common      common
                                     Common    paid in     Retained Comprehensive stock held  stock held   Treasury
                                     stock     capital     earnings     Income      by MRP      by ESOP     stock       Total
                                    --------   --------    --------    --------    --------    --------    --------    --------
<S>                                 <C>        <C>         <C>         <C>         <C>         <C>         <C>         <C>
Balance at September 30, 2002       $     24   $  4,570    $ 13,025    $    537    $    (73)   $   (312)   $   (543)   $ 17,228

Comprehensive income:
   Net income                                                   268                                                         268
   Change in net unrealized gain
      on securities available for
      sale, net of taxes                                                    (18)                                            (18)
                                                                                                                       --------

     Total comprehensive income                                                                                             250
                                                                                                                       --------

Allocation of ESOP (3,825 shares)                    18                                              18                      36

Purchase stock for MRP (6,600
   shares)                                          (33)                                (32)                                (65)
Amortization of MRP                                                                      10                                  10
Exercise of stock options (1,125
   shares)                                                                                                        6           6

Cash dividends declared
   ($0.13 per share)                                           (126)                                                       (126)
                                    --------   --------    --------    --------    --------    --------    --------    --------

Balance at March 31, 2003           $     24   $  4,555    $ 13,167    $    519    $    (95)   $   (294)   $   (537)   $ 17,339
                                    ========   ========    ========    ========    ========    ========    ========    ========
</TABLE>


See accompanying notes to consolidated financial statements

                                        5
<PAGE>

                     GOUVERNEUR BANCORP, INC AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                         Six months ended March 31, 2002
                  (In thousands, except share data) (Unaudited)
<TABLE>
<CAPTION>

                                                                    Accumulated   Unearned   Unallocated
                                              Additional               Other       Common      common
                                     Common    paid in    Retained Comprehensive stock held  stock held   Treasury
                                     stock     capital    earnings     Income        MRP        ESOP       stock       Total
                                    --------   --------   --------    --------    --------    --------    --------    --------
<S>                                 <C>        <C>         <C>         <C>         <C>         <C>         <C>         <C>
Balance at September 30, 2001       $     24   $  4,540   $ 12,463    $    610    $    (89)   $   (349)   $   (543)   $ 16,656

Comprehensive income:
   Net income                                                  409                                                         409
   Change in net unrealized gain
      on securities available for
      sale, net of taxes                                                  (109)                                           (109)
                                                                                                                      --------

     Total comprehensive income                                                                                            300
                                                                                                                      --------

Allocation of ESOP (3,550 shares)                    12                                             18                      30

Amortization of MRP                                                                      7                                   7

Cash dividends declared
   ($0.10 per share)                                           (97)                                                        (97)
                                    --------   --------   --------    --------    --------    --------    --------    --------

Balance at March 31, 2002           $     24   $  4,552   $ 12,775    $    501    $    (82)   $   (331)   $   (543)   $ 16,896
                                    ========   ========   ========    ========    ========    ========    ========    ========
</TABLE>


See accompanying notes to consolidated financial statements

                                        6
<PAGE>

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

<TABLE>
<CAPTION>
                                                                               Six Months Ended
                                                                                   March 31,
                                                                           ------------------------
                                                                              2003          2002
                                                                           ----------    ----------
<S>                                                                        <C>           <C>
Cash flows from operating activities:
   Net Income                                                              $      268    $      409

   Adjustments to reconcile net income to net cash provided by
      operating activities:
            Depreciation                                                           74            40
            Provision for loan losses                                              50            50
            Net gain on sales of securities                                       (97)          (96)
            Net amortization of securities                                         56            43
            Allocated and earned shares of ESOP and MRP                            46            37
            Decrease in accrued interest receivable                                10            64
            (Increase) decrease in other assets                                   (61)          185
            Decrease in other liabilities                                         (74)         (546)
                                                                           ----------    ----------
                    Net cash provided by operating activities                     272           186
                                                                           ----------    ----------

Cash flows from investing activities:
   Net decrease (increase) in loans                                            (1,421)        1,447
   Proceeds from sales of securities AFS                                          599           112
   Proceeds from maturities and principal reductions AFS                        2,134         3,068
   Purchases of securities AFS                                                 (2,310)       (5,563)
   Proceeds from maturities and principal reductions HTM                          610           667
   Additions to premises and equipment                                            (20)         (115)
   Redemption of Federal Home Loan Bank stock                                     110            --
                                                                           ----------    ----------
                    Net cash used in investing activities                        (298)         (384)
                                                                           ----------    ----------

Cash flows from financing activities:
   Net increase in deposits                                                     2,232           961
   Exercise of stock options                                                        6            --
   Net payments of borrowings to Federal Home Loan Bank                          (700)       (1,500)
   Purchase of common stock by Management Recognition Plan                        (65)           --
   Payment of cash dividend                                                      (126)          (97)
                                                                           ----------    ----------
                     Net cash provided by (used in) financing activities        1,347          (636)
                                                                           ----------    ----------

   Net increase (decrease) in cash and cash equivalents                         1,321          (834)
   Cash and cash equivalents at beginning of period                             3,047         2,852
                                                                           ----------    ----------

   Cash and cash equivalents at end of period                              $    4,368    $    2,018
                                                                           ==========    ==========


Non-cash investing activities:
   Additions to foreclosed assets                                          $      184    $       86
Cash paid during the period for:
   Interest                                                                     1,023         1,285
   Income taxes                                                                    98           144
</TABLE>

See accompanying notes to consolidated financial statements

                                        7
<PAGE>

                     GOUVERNEUR BANCORP, INC. AND SUBSIDIARY
                   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 intercompany accounts and transactions have been
         eliminated in this consolidation.

         Cambray Mutual Holding Company ("Cambray MHC"), the Company's parent
         mutual holding company, held 1,311,222 shares or 57.6% of the Company's
         issued and outstanding common stock, and shareholders other than
         Cambray MHC held 966,662 shares or 42.4% of such stock at March 31,
         2003.

2.       Basis of Presentation
         ---------------------

         The accompanying unaudited consolidated financial statements were
         prepared in accordance with instructions for Form 10-QSB and,
         therefore, do not include information or footnotes necessary for a
         complete presentation of financial condition, results of operations,
         and cash flows in conformity with generally accepted accounting
         principles. However, in the opinion of management, all adjustments
         consisting of only normal recurring adjustments or accruals which are
         necessary for a fair presentation of the consolidated financial
         statements have been made at and for the three months and the six
         months ended March 31, 2003 and 2002. The results of operations for the
         three month and six month periods ended March 31, 2003 are not
         necessarily indicative of the results which may be expected for an
         entire fiscal year or other interim periods.

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. Unallocated shares held by the Company's
         Employee Stock Ownership Plan ("ESOP") are not included in the weighted
         average number of shares outstanding. Diluted earnings per share
         reflects additional common shares that would have been outstanding if
         dilutive potential common shares had been issued, as well as any
         adjustment to income that would result from the assumed issuance.

         Basic and diluted earnings per share for the three-month and six month
         periods ending March 31, 2003 and 2002 were computed as follows (in
         thousands, except per share data):

<TABLE>
<CAPTION>
                                                       Three Months Ended      Six Months Ended
                                                            March 31,             March 31,
                                                       -------------------   -------------------
          Basic earnings per share:                      2003       2002       2003       2002
                                                       --------   --------   --------   --------
<S>                                                    <C>        <C>        <C>        <C>
          Net income                                   $    170   $    216   $    268   $    409

          Weighted average common shares outstanding      2,203      2,189      2,201      2,188
                                                       --------   --------   --------   --------

          Basic earnings per share                     $   0.08   $   0.10   $   0.12   $   0.19
                                                       ========   ========   ========   ========
</TABLE>

                                        8
<PAGE>

<TABLE>
<CAPTION>
                                                                    Three Months Ended     Six Months Ended
                                                                         March 31,             March 31,
                                                                   -------------------   -------------------
          Diluted earnings per share:                                2003       2002       2003       2002
                                                                   --------   --------   --------   --------
<S>                                                                <C>        <C>        <C>        <C>
          Net income                                               $    170   $    216   $    268   $    409
                                                                   ========   ========   ========   ========

          Weighted average common shares outstanding                  2,203      2,189      2,201      2,188
          Additional potentially dilutive securities from common
              stock options (equivalent in common stock)                 30         25         30         25
                                                                   --------   --------   --------   --------
          Diluted weighted average common shares outstanding          2,233      2,214      2,231      2,213
                                                                   ========   ========   ========   ========

          Diluted earnings per share                               $   0.08   $   0.10   $   0.12   $   0.18
                                                                   ========   ========   ========   ========
</TABLE>

4.       Comprehensive Income
         --------------------

         Comprehensive income, presented in the consolidated statements of
         shareholders' equity, consists of net income and the net change for the
         period in after-tax unrealized gains or losses on securities available
         for sale. Accumulated other comprehensive income in the consolidated
         statements of financial condition represents the net unrealized gains
         or losses on securities available for sale as of the reporting dates,
         net of related tax effect.

         A summary of the unrealized gains (losses) and reclassification
         adjustments of securities available for sale and the related tax
         effects for the three and six month periods ended March 31, 2003 and
         2002 is as follows (in thousands):

<TABLE>
<CAPTION>
                                                               Three Months Ended       Six Months Ended
                                                                    March 31,               March 31,
                                                              --------------------    --------------------
                                                                2003        2002        2003        2003
                                                              --------    --------    --------    --------
<S>                                                           <C>         <C>         <C>         <C>
          Unrealized holding gains (losses) arising
             During the period                                $    (47)   $    (36)   $     67    $   (115)

          Reclassification adjustment for gains realized in
             net income during period                              (91)        (96)        (97)        (96)
                                                              --------    --------    --------    --------
                                                                  (138)       (132)        (30)       (211)
          Tax effect                                                55          53          12         102
                                                              --------    --------    --------    --------

          Other comprehensive income (loss), net of tax       $    (83)   $    (79)        (18)   $   (109)
                                                              ========    ========    ========    ========
</TABLE>

5.       Stock Option and Management Recognition Plans
         ---------------------------------------------

         The Company has a Stock Option Plan ("SOP") and a Management
         Recognition Plan ("MRP") for directors, officers and key employees. The
         Company accounts for stock options granted under the SOP and MRP in
         accordance with the provisions of Accounting Principles Board (APB)
         Opinion No. 25, Accounting for Stock Issued to Employees, and related
         interpretations. The Company provides pro forma net income and pro
         forma earnings per share disclosures for employee stock options grants
         as if the fair-value-based method defined in Statement of Financial
         Accounting Standards (SFAS) No. 123, Accounting for Stock-Based
         Compensation, had been applied. The fair value of the shares awarded,
         under the MRP, measured as of the grant date, is recognized as unearned
         compensation (a component of shareholders' equity) and amortized to
         compensation expense over the vesting period.

                                        9
<PAGE>

         The following table illustrates the effect on net income and earnings
         per share if the Company had applied the fair value recognition
         provisions of SFAS No. 123 to stock-based compensation (in thousands,
         except per share data):

<TABLE>
<CAPTION>
                                                                     Three Months Ended       Six Months Ended
                                                                          March 31,               March 31,
                                                                    --------------------    --------------------
                                                                      2003        2002        2003        2003
                                                                    --------    --------    --------    --------
<S>                                                                 <C>         <C>         <C>         <C>

          Net income, as reported                                   $    170    $    216    $    268    $    409

          Total stock-based compensation expense determined
             under fair value method for all awards, net of taxes         (7)         (7)        (14)        (13)
          Amounts included in determination of net income,
             net of taxes                                                  3           2           6           4
                                                                    --------    --------    --------    --------
           Pro forma net income                                          166         211         260         400
                                                                    ========    ========    ========    ========

          Earnings per share:
              Basic - as reported                                   $   0.08    $   0.10    $   0.12    $   0.19
              Basic - pro forma                                         0.08        0.10        0.12        0.18
              Diluted - as reported                                 $   0.08    $   0.10    $   0.12    $   0.18
              Diluted - pro forma                                       0.07        0.10        0.12        0.18
</TABLE>


6.       Impact of New Accounting Standards
         ----------------------------------

         In July 2002, the Financial Accounting Standards Board ("FASB") issued
         Statement No. 146, "Accounting for Costs Associated with Exit or
         Disposal Activities", which nullifies EITF Issue 94-3, "Liability
         Recognition for Certain Employee Termination Benefits and Other Costs
         to Exit an Activity (including Certain Costs Incurred in a
         Restructuring)." This statement delays recognition of these costs until
         liabilities are incurred, rather than at the date of commitment to the
         plan, and requires fair value measurement. It does not impact the
         recognition of liabilities incurred in connection with a business
         combination or the disposal of long-lived assets. The provisions of
         this statement are effective for exit or disposal activities that are
         initiated after December 31, 2003, and are not expected to have a
         significant impact on the Company's financial condition or results of
         operations.

         In October 2002, the FASB issued Statement No. 147, "Acquisitions of
         Certain Financial Institutions." This statement provides guidance on
         accounting for the acquisition of a financial institution , including
         the acquisition of part of a financial institution. The statement
         defines criteria for determining whether the acquired financial
         institution meets the conditions for a "business combination". If the
         acquisition meets the conditions for a "business combination", the
         specialized accounting guidance under Statement No. 72, "Accounting for
         Certain Acquisitions of Banking or Thrift Institutions" will not apply
         after September 30, 2002 and the amount of any identifiable intangible
         asset will be reclassified to goodwill upon adoption of Statement
         No.147. The transition provisions were effective on October 1, 2002 and
         did not have any impact on the Company's financial condition or results
         of operations.

         In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN
         45"), "Guarantor's Accounting and Disclosure Requirements for
         Guarantees, Including Indirect Guarantees of Indebtedness of Others."
         This Interpretation expands the disclosures to be made by a guarantor
         in its financial statements about its obligations under certain
         guarantees and requires the guarantor to recognize a liability for the

                                       10
<PAGE>

         fair value of an obligation assumed under certain specified guarantees.
         FIN 45 clarifies the requirements of FASB Statement No. 5, "Accounting
         for Contingencies." In general, FIN 45 applies to contracts or
         indemnification agreements that contingently require the guarantor to
         make payments to the guaranteed party based on changes in an underlying
         that is related to an asset, liability or equity security of the
         guaranteed party, which would include financial standby letters of
         credit. Certain guarantee contracts are excluded from both the
         disclosure and recognition requirements of this Interpretation,
         including among others, guarantees related to commercial letters of
         credit and loan commitments. The disclosure requirements of FIN 45
         require disclosure of the nature of the guarantee, the maximum
         potential amount of future payments that the guarantor could be
         required to make under the guarantee and the current amount of the
         liability, if any, for the guarantor's obligations under the guarantee.
         The accounting recognition requirements of FIN 45 are to be applied
         prospectively to guarantees issued or modified after December 31, 2002.
         Adoption of FIN 45 did not have a significant impact on the Company's
         financial condition or results of operations.

         Outstanding letters of credit written are conditional commitments
         issued by the Company to guarantee the performance of a customer to a
         third party. The Company's exposure to credit loss in the event of
         nonperformance by the other party to the financial instrument for
         standby letters of credit is represented by the contractual amount of
         those instruments. The Company had one $20,000 standby letter of credit
         as of March 31, 2003. The Bank uses the same credit policies in making
         conditional obligations as it does for on-balance sheet instruments.

         The outstanding letter of credit will expire within the next twelve
         months. The credit risk involved in issuing letters of credit is
         essentially the same as that involved in extending other loan
         commitments. The Company requires collateral and personal guarantees
         supporting these letters of credit as deemed necessary. Management
         believes that the proceeds obtained through a liquidation of such
         collateral and the enforcement of personal guarantees would be
         sufficient to cover the maximum potential amount of future payments
         required under the corresponding guarantees. No standby letters of
         credit were issued after December 31, 2002.

7.       Retained Earnings
         -----------------

         Cambray MHC waived receipt of several past dividends, paid by the
         Company. The dividends are considered as restrictions in the retained
         earnings of the Company. As of March 31, 2003, the aggregate retained
         earnings restricted for cash dividends waived was $576,939.

         Item 2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations.

     Gouverneur Bancorp, Inc. ("We" or the "Company") is a corporation organized
under the laws of the United States in March 1999, in connection with the
reorganization of its wholly owned subsidiary, Gouverneur Savings and Loan
Association (the "Bank"), into a mutual holding company structure. The Company's
assets consist primarily of all the outstanding capital stock of the Bank and
cash of $142,000 at March 31, 2003. The Company's principal business is the
ownership of the Bank. The Company is a savings and loan holding company
registered with the Office of Thrift Supervision ("OTS") and subject to
regulation under federal banking laws and regulations. In this document,
references to the Company include the Bank, unless the context denotes
otherwise. The terms "Registrant", "we", "our" or similar terms refer to
Gouverneur Bancorp, Inc.

     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 funds borrowed
from the Federal Home Loan Bank ("FHLB"), to make loans and other investments.
Most of the loans are one to four family residential mortgages made to residents
in the Bank's primary market area, 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.

                                       11
<PAGE>

     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, such as deposits and borrowings. 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.

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-QSB 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
regarding 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 may affect our operations, performance, development and
results, the interest rate sensitivity of our assets and liabilities, our asset
quality 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.

Critical Accounting Policies

Note 2 to the consolidated financial statements of the Company (included in Item
7 of the Annual Report on Form 10-KSB of the Company for the year ended
September 30, 2002) lists significant accounting policies used in development
and presentation of its financial statements. This discussion and analysis, the
significant accounting policies, and other financial statement disclosures
identify and address key variables and other qualitative and quantitative

                                       12
<PAGE>

factors that are necessary for an understanding and evaluation of the Company's
results of operations. The following accounting policy is the one identified by
management to be critical to the results of operations:

     Allowance for Loan Losses. The allowance for loan losses is the estimated
amount considered adequate to cover credit losses inherent in the outstanding
loan portfolio at the balance sheet date. The allowance is established through
the provision of loan losses charged against income. In determining the
allowance for loan losses, management makes significant estimates and,
accordingly, has identified this policy as probably the most critical for the
Company.

     Management performs a monthly evaluation of the adequacy of the allowance
for loan losses. Consideration is given to a variety of factors in establishing
this estimate, including, but not limited to, current economic conditions,
diversification of the loan portfolio, delinquency statistics, results of
internal loan reviews, borrowers' actual or perceived financial and managerial
strengths, the adequacy of the underlying collateral (if collateral dependent),
the present value of future cash flows and other relevant factors. This
evaluation is inherently subjective, as it requires material estimates that may
be susceptible to significant change, including the amounts and timing of future
cash flows expected to be received on impaired loans.

     The analysis has two components, specific and general allocations.
Collateral values discounted for market conditions and selling costs are used to
establish specific allocations. The Bank's historical loan loss experience,
delinquency rates and general economic conditions are used to establish general
allocations for the remainder of the portfolio.

     Management monitors the adequacy of the allowance for loan losses on an
ongoing basis and reports its adequacy assessment monthly to the Board of
Directors, and quarterly to the Audit Committee.

Comparison of Financial Condition at March 31, 2003 and September 30, 2002.

     During the six months from September 30, 2002 through March 31, 2003, total
assets increased $1.5 million, or 1.76%, from $85.1 million to $86.6 million.
Net loans increased by $1.2 million, or 2.21%, from $54.3 million to $55.5
million. This increase was the result of an increase of $2.1 million in
residential real estate loans combined with decreases of $0.3 million in other
commercial loans and $0.6 million in other consumer loans. The commercial loan
portfolio continues to contract, as we have not been writing new loans pending
the hiring of a commercial loan officer. The Board has approved making new
commercial loans on a limited basis using the current staff in place until such
time as we can secure the right person for the job. The Board also approved the
addition of Small Business Administration ("SBA") and United States Department
of Agriculture ("USDA") fully guaranteed commercial loan pools and individual
loans to the investment policy. Purchasing either pools or loans will allow us
to grow our commercial loan portfolio before we hire a commercial loan officer,
as it requires minimal administration.

     Since we hold our mortgage loans to term, management feels that offering
loans fixed at the current secondary market rates would subject the Bank to
excessive interest rate risk and it would also expose a higher percentage of our
portfolio to the lower rates. We have lowered our adjustable rate mortgage and
fixed rate mortgage loan rates to be competitive with other portfolio lenders in
the Bank's market area. Special financing arrangements offered by automobile
manufacturers continue to hinder demand for the Bank's automobile loans.

     Our borrowed funds from the FHLB, consisting of advances and securities
repurchase obligations, were $12.7 million on March 31, 2003 versus $13.4
million on September 30, 2002. We repaid a $0.7 million borrowing that matured
in February 2003. Deposits increased $2.2 million, or 4.17%, from $52.8 million
to $55.0 million during the past six months. Savings deposits and NOW and money
market accounts increased by $2.1 million and $0.7 million, respectively. These
increases were offset in part by decreases of $0.1 million in demand deposits
and $0.5 million in time deposits.

                                       13
<PAGE>

     Our shareholders' equity rose by $111,000 during the six months. The
increase is attributable to the combination of net income of $268,000, net
increases of $46,000 in share allocation in the ESOP and amortization in the
MRP, and the issuance of $6,000 in treasury stock. Treasury stock was used to
supply the 1,125 shares needed when one director exercised some of his vested
options. Equity was reduced by the payment of a cash dividend of $126,000 to our
shareholders, an $18,000 decrease in other comprehensive income as the market
value of "available for sale" securities decreased and by $65,000 for the
purchase of 6,600 shares of common stock for the MRP.

     At March 31, 2003, non-performing assets were 0.75% of total assets, down
from 0.88% at September 30, 2002. Non-performing loans decreased from 1.23% of
total loans to 0.89% over the same period. A summary of the Company's
non-performing assets and related ratios follows:

                                                    March 31,   September 30,
                  Non-performing assets               2003          2002
                  ---------------------            ----------    ----------

                  Non-accrual loans
                  -----------------
                  Residential mortgages
                      and home equity loans        $       75    $      282
                  Commercial mortgages                    125            41
                  Consumer other                           59            12
                  Commercial other                        188            84
                                                   ----------    ----------
                                                          447           419

                  Restructured commercial other            45           261
                                                   ----------    ----------
                      Total non-performing loans          492           680

                  Foreclosed real estate                  151            25
                  Other repossessed assets                  3            46
                                                   ----------    ----------
                    Total non-performing assets    $      646    $      751
                                                   ==========    ==========


                  Non-performing loans to
                       total loans                       0.89%         1.23%


                  Non-performing assets to
                       total assets                      0.75%         0.88%


     The Company had no loans more than 90 days delinquent and accruing at March
31, 2003 or September 30, 2002.

     Both non-accrual residential mortgages are currently in foreclosure
proceedings while one of two commercial mortgages is subject to bankruptcy
proceedings and the other is in foreclosure. The borrower filing bankruptcy has
four loans, all non-accrual, totaling $210,000, comprised of the $83,000
commercial mortgage, a $112,000 commercial equipment loan, a $13,000 automobile
loan and a $2,000 unsecured loan. Two other commercial loans, including the
equipment loan in bankruptcy, account for the $188,000 in this category. The
other loan carries an 80% guarantee from the Small Business Administration
("SBA").

     Four automobile loans totaling $53,000, and two other consumer loans
totaling $6,000, comprise the consumer other total. Each of those balances
includes a previously mentioned loan in bankruptcy.

     The restructured commercial loan is secured by real estate and is in
foreclosure proceedings.

                                       14
<PAGE>

     Management believes that each of these non-performing loans is adequately
secured by collateral. Further, management is not aware of any factors common to
these loans, which caused their non-performance or any developments that suggest
an upward trend in delinquencies. Accordingly, while we will continue to monitor
asset quality, management has determined that the small decrease in the loan
loss allowance is appropriate at this time due to the decrease in the size of
our commercial and consumer loan portfolios, which have a higher degree of risk
than our residential mortgage portfolio.

Comparison of Results of Operations for the Three Months Ended March 31, 2003
and 2002.

     General. Our net income for the three months ended March 31, 2003 was
$170,000, a decrease of $46,000, or 21.3%, below our net income for the same
period last year. The reduction in net income was caused by the combination of
the following factors:

     1.   our net interest income increased by $22,000 as the result of interest
          expense decreasing more than interest income.

     2.   non-interest income grew by $15,000 over last year's period,

     3.   the provision for loan losses decreased by $15,000 for the second
          quarter of this fiscal year versus last fiscal year due to a decrease
          in the level of non-performing loans,

     4.   non-interest expense increased $130,000 in the three month period this
          year compared to last year's period as a result of increases in most
          non-interest expense categories and

     5.   a decrease of $32,000 in income taxes.

     Basic and diluted earnings per share were $0.08 for this year's quarter
versus $0.10 for both measures in last year's quarter.

     Interest Income. Interest income decreased $56,000, or 4.0%, for the three
months ended March 31, 2003 as compared to the three months ended March 31,
2002. A decrease of 51 basis points (0.51%) in the average interest rate earned
on interest-earning assets resulted in a decrease in interest income of $86,000,
while an increase of $2.6 million in the average balance of interest-earning
assets resulted in an increase of $30,000 in interest income

     Interest income on loans decreased by $19,000, or 1.7%. A decrease of 23
basis points (0.23%) from 8.51% in last year's quarter to 8.28% in this year's
quarter decreased our interest income by $31,000, while an increase of $569,000
in the average balance of loans from $54.8 million to $55.4 million resulted in
an increase of $12,000 in interest income.

     The decrease in the average rates earned on securities was caused in part
by the downward adjustment of adjustable-rate mortgaged-backed securities in the
portfolio over the past year. The one-year adjustable-rate mortgage-backed
securities help to reduce the interest rate risk of our long-term fixed-rate
mortgage portfolio. Interest income on securities decreased by $35,000. A
decrease of 88 basis points (0.88%) from 4.38% in last year's quarter to 3.50%
in this year's quarter in the average interest rate on securities was
responsible for a $51,000 decrease in interest income, while an increase of $1.6
million in the average balance of securities resulted in an increase in interest
income of $16,000. Interest income on other short-term investments decreased by
$2,000. A 66 basis point (0.66%) decrease in the average interest rate earned on
other short-term investments decreased interest income by $3,000, while an
increase of $396,000 in the average balance of other short-term investments
increased interest income by $1,000.

                                       15
<PAGE>

     Interest Expense. Interest expense decreased $78,000, or 13.7%, from the
three months ended March 31, 2002 to the three months ended March 31, 2003. A
decrease of 61 basis points (0.61%) in the average rate we paid on
interest-bearing liabilities from 3.60% last year to 2.99% this year resulted in
a decrease of $79,000 in interest expense, while an increase of $2.4 million
from $64.4 million to $66.8 million in the average balance of interest-bearing
liabilities resulted in a $1,000 increase in interest expense.

     Interest expense decreased on time deposits and funds borrowed from FHLB by
$62,000 and $23,000 respectively. The average rate we paid on time deposits
decreased 114 basis points (1.14%) from 4.38% for the three months ended March
31, 2002 to $3.24% for the three months ended March 31, 2003. This decline in
rates produced a decrease of $81,000 in interest expense, while an increase of
$1.8 million in the average balance of time deposits from $27.1 million to $28.9
million over the same period increased interest expense by $19,000. An increase
of 24 basis points (0.24%) from 4.64% in last year's quarter to 4.88% in this
year's quarter on the average rate we paid on FHLB borrowings increased interest
expense by $9,000, while a decrease of $2.7 million in the amount of borrowed
funds from last year's quarter to this year's quarter resulted in a decrease of
$32,000 in interest expense.

     Interest expense increased on savings and club accounts by $6,000 and by
$1,000 on money market and NOW accounts. The average rate we paid on savings and
club accounts decreased 15 basis points (0.15%) from 2.16% to 2.01% resulting in
a $6,000 decrease in interest expense, while an increase of $2.4 million in the
average balance of savings and club accounts from $14.8 million $17.2 million
resulted in an increase of $12,000 in interest expense. The average rate we paid
on NOW and money market accounts decreased by 9 basis points (0.09%) from 1.11%
for last year's quarter to 1.02% for this year's quarter, decreasing interest
expense by $2,000, while an increase of $1.0 million from $6.6 million to $7.6
million in the average balance of these accounts increased interest expense by
$3,000.

     Net Interest Income. The net impact of the decreases in interest income and
interest expense was a $22,000 increase in net interest income. Our interest
rate spread (the difference between the average rate we earn and the average
rate we pay) increased by 10 basis points (0.10%) from 3.59% for the three
months ended March 31, 2002 to 3.69% for the three months ended March 31, 2003,
while our net interest margin (net interest income divided by average earning
assets) decreased by 2 basis points (0.02%) from 4.25% to 4.23% for the same
time frame.

     The average yield on our loans and securities portfolio decreased as
discussed above. The decrease in the average interest rate earned on our
interest-earning assets by 51 basis points, was more than offset by the decrease
of 61 basis points in the average cost of funds and resulted in a $22,000
increase in net interest income.

     Average shareholders' equity represented 21.3% of average interest-earning
assets for the quarter ended March 31, 2003, while it represented 21.4% of
average interest-earning assets for the same quarter last year. Our ratio of
average interest-earning assets to average interest-bearing liabilities
decreased from 1.23 times in 2002 to 1.22 times in 2003.

     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 charge to provision
for loan losses, which is an expense on our income statement. In determining the
appropriate provision for loan losses, management considers the level of and
trend in non-performing loans, the level of and trend in net loan charge-offs,
the dollar amount and mix of the loan portfolio, as well as general economic
conditions and real estate trends in the Company's market area, which can impact
the inherent risk of loss in the Company's portfolio. The OTS may disagree with
our judgments regarding the risks in our loan portfolio and could require us to
increase the allowance in the future.

     For the three months ended March 31, 2003, we provided $10,000 for loan
losses, compared to $25,000 in the same quarter last year. At March 31, 2003 and
2002, the ratio of our loan allowance to total loans was 1.17% and 1.20%,
respectively. On December 31,2002 the allowance was $672,000, or 1.20% of total

                                       16
<PAGE>

loans, and we determined at the end of the second quarter that the appropriate
level for the allowance was $659,000. We had charge-offs during the quarter of
$59,000 and recoveries of $36,000, so a $10,000 provision was necessary to reach
the desired level for the allowance. Our level of non-accruing loans, loans 90
days and still accruing and restructured loans was $492,000, or 0.89% of total
loans at March 31, 2003 compared to $1,097,000, or 1.96% of total loans at
December 31, 2002. Management feels that these loans are adequately secured and
do not require any adjustment to the allowance for loan losses at this time.

     Non-interest Income. Our non-interest income was $15,000 higher in the
second quarter of fiscal 2003 versus the second quarter of fiscal 2002. Service
charges and other income increased by $20,000 while gain on sale of securities
decreased by $5,000 for the second quarter of this year.

     Non-interest Expenses. Non-interest expenses increased by $130,000 from the
fiscal 2002 quarter to the fiscal 2003 quarter. This increase was primarily due
to additional salaries and benefits expense of $65,000, and increases of
$29,000, $17,000 and $22,000 in occupancy and equipment, postage and supplies
and other expense, respectively. The increase in salaries and benefits is the
result of having an additional seven people on our staff this year due to the
opening of two new offices in August 2002 and performance increases to our
employees. Occupancy and equipment, as well as postage and supplies expenses are
up because of the two new locations. Depreciation expense, part of occupancy and
equipment, is up by $17,000.

     Other expense increased in part because of increases of $2,000 for
advertising expense, $5,000 for telephone expense, $3,000 in courier and armored
car services and $6,000 in utilities expense that directly relate to the two new
offices. At March 31, 2003, we had twenty-nine full-time and two part-time
employees, compared to twenty-two full time and two part-time employees at the
end of March 2002.

     Income tax expense. Our income tax expense decreased by $32,000 to $108,000
from $140,000, or 22.9%, comparing the second quarter of fiscal 2003 to the same
quarter of fiscal 2002. The decreased expense was the result of net income
before income tax dropping by $78,000, or 21.9%, from last year's $356,000 to
this year's $278,000.

Comparison of Results of Operations for the Six Months Ended March 31, 2003 and
2002.

     General. Our net income for the six months ended March 31, 2003 was
$268,000, a decrease of $141,000 from last year's $409,000 by 34.5%. The
following operating results combined to produce the decrease:

     1.   net interest income increased by $45,000 as the result of interest
          expense decreasing more than interest income,

     2.   non-interest income improved by $22,000,

     3.   non-interest expenses increased by $307,000 and

     4.   income taxes decreased by $99,000.

     Basic earnings per share were $0.12 for the first six months of this year
against $0.19 per share for last year's period and diluted earnings per share
were $0.12 and $0.18 respectively.

     Interest Income. Interest income decreased by $171,000, or 6.0%, from the
six months ended March 31, 2002 to the six months ended March 31, 2003. As
interest rates continue to hold at historic lows, our portfolios continue to
re-price lower causing reduced interest income and interest expense. Average
interest-earning assets increased $2.3 million from $79.0 million for the first
six months of fiscal year 2002 to $81.3 million for the same period this year.
The increase was composed of a $2.4 million increase in the average balance in

                                       17
<PAGE>

securities and other short-term investments from $23.7 million in fiscal 2002 to
$26.1 million in fiscal 2003, and a decrease of $0.1 million in loans from $55.3
million last year to $55.2 million this year.

     The average interest rate we earned on our loans and investments was 62
basis points (0.62%) lower in the first six months this year than last year as
the rate fell from 7.19% last year to 6.57% this year. The average rate earned
on loans fell 35 basis points (0.35%) from 8.41% last year to 8.06% this year,
while the average rate earned on securities decreased by 91 basis points (0.91%)
from 4.54% last year to 3.63% this year, and the average rate on other
short-term investments, primarily overnight fed funds, decreased by 62 basis
points (0.62%) from 1.71% to 1.09%.

     The decrease in the average interest rate earned on loans resulted in a
decrease of $98,000 in interest income, while the decline in the average loan
balance decreased interest income by $5,000, resulting in a $103,000 decrease in
interest income from the loan portfolio.

     Holding one-year adjustable rate mortgage-backed securities in the
investment portfolio during the falling rate environment has caused additional
reduction in interest income. However, these securities help reduce the interest
rate risk of our long-term fixed-rate mortgage portfolio in a rising rate
scenario. For our securities and short-term investments, the drop in interest
rates resulted in a decrease in interest income of $111,000, while an increase
in the average balances increased interest income by $43,000 resulting in a net
loss of $68,000 in interest income.

     Overall, the increase in the average volume of interest-earning assets
yielded a $37,000 increase in interest income, while the decrease in average
interest rates reduced interest income by $208,000, for a net decrease of
$171,000 in interest income.

     Interest Expense. Like interest income, interest expense decreased from the
first half of 2002 to the corresponding period in 2003, as a result of a
decrease in interest rates. The increase in the volume of interest-bearing
liabilities was the result of an increase in savings and club accounts, time
certificates and NOW and money markets accounts offset in part by a decrease in
our average borrowings from the FHLB. A $7,000 increase in interest expense
resulted from an increase in the average volume of interest-bearing liabilities
of $2.2 million from $64.4 million last year to $66.6 million this year, while a
$223,000 decrease in interest expense was due to a decrease in the average rate
we paid on interest bearing liabilities by 78 basis points (0.78%), from 3.84%
in 2002 to 3.06% in 2003.

     Interest expense decreased on time certificates, NOW and money market
accounts and funds borrowed from FHLB by $154,000, $6,000 and $56,000
respectively. The average rate we paid on time deposits decreased 139 basis
points (1.39%) from 4.72% for the six months ended March 31, 2002 to $3.33% for
the six months ended March 31, 2003, resulting in a decrease of $199,000 in
interest expense, while an increase of $2.0 million in the average balance of
time deposits from $27.1 million to $29.1 million over the same period increased
interest expense by $45,000. An increase of 15 basis points (0.15%) from 4.67%
last year to 4.82% this year on the average rate we paid on borrowings increased
interest expense by $12,000, while a decrease of $2.8 million in the amount of
borrowed funds from last year to this year resulted in a decrease of $68,000 in
interest expense.

     Interest expense on savings and club accounts remained the same for the six
months this year as for the six months last year as an increase in volume of
$2.2 million from $14.5 million to $16.7 million was offset by a decrease in the
average interest rate by 32 basis points (0.32%) from 2.43% to 2.11% over the
same period. Interest expense decreased $6,000 on NOW and money market accounts.
The average rate we paid on NOW and money market accounts decreased by 31 basis
points (0.31%) from 1.37% for the first six months of last year to 1.06% for the
first six months of this year decreasing interest expense by $11,000, while an
increase of $0.8 million from $6.7 million to $7.5 million in the average
balance of these accounts increased interest expense $5,000.

                                       18
<PAGE>

     Net Interest Income. The net effect of the decreases in interest income and
interest expense was a $45,000 increase in net interest income. Our interest
rate spread (the difference between the average rate we earn and the average
rate we pay) increased by 16 basis points (0.16%) from 3.35% last year to 3.51%
this year. Our net interest margin was 4.06% in the first half of fiscal 2003
and the first half of fiscal 2002.

     The average yield on loans and on our securities portfolio decreased as
discussed above. The decrease in the rate earned on our interest-earning assets
of 0.62% was more than offset by the decrease in the average cost of funds of
0.78% resulting in an increase in our interest rate spread by 16 basis points,
or 0.16%.

     Average shareholders' equity represented 21.3% of average interest-earning
assets for both the six months ended March 31, 2003 and the six months ended
March 31, 2002. The ratio of average interest-earning assets to average
interest-bearing liabilities decreased from 1.23 times in 2002 to 1.22 times in
2003.

     Provision for Loan Losses. For each of the six month periods ended March
31, 2003 and March 31, 2002, we provided $50,000 for loan losses. At March 31,
2003 and 2002 the ratio of our loan loss allowance to total loans was 1.17% and
1.20%, respectively. As disclosed in the comparative discussion of financial
condition, our level of non accruing loans, loans 90 days past due and still
accruing and restructured loans was $492,000, or 0.89% of total loans at March
31, 2003 compared to $680,000, or 1.23% of total loans on September 30, 2002.
Management feels that these loans are adequately secured and do not require any
adjustment to the allowance for loan losses.

     Non-interest Income. Our non-interest income was $22,000 higher this year
for the first six months versus the same period in 2002. The increase was the
result of increases of $13,000 in service charge income, $8,000 in other fees
and $1,000 in gain on sale of securities.

     Non-interest Expense. Non-interest expenses increased by $307,000 for the
first six months of fiscal 2003 compared to fiscal 2002. The increase was due to
increases of $130,000 in salaries and employee benefits, $14,000 in directors'
fees, $57,000 in building and occupancy, $5,000 in data processing, $19,000 in
postage and supplies, $8,000 in professional fees, $7,000 in foreclosed assets
and $67,000 in other expense. Directors' fees increased because we held
additional meetings and because last year's expense was reduced to reflect
market value adjustments on a deferred fees plan. The other expense categories
are primarily higher due to the addition of seven new employees starting in May
of last year and two new offices which opened in August of last year.

     Income tax expense. Our income tax expense decreased $99,000, or 37.2%,
from $266,000 last year to $167,000 this year. The decreased expense was the
result of lower income before income tax of $240,000, or 35.6%, from $675,000
for the first half of last year to $435,000 for the first half of this year.

                                       19
<PAGE>

Liquidity and Capital Resources

     Our primary sources of funds are deposits, borrowings from the FHLB, 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 pre-payments,
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 readily available for investment in loans
when needed. During the six months ended March 31, 2003, we increased our cash
and cash equivalents by $1.3 million. We originated $8.8 million of new loans
during the six months ended March 31, 2003. Loans, net, after payments,
charge-offs and transfers to foreclosed real estate, increased by $1.4 million
during the period.

     Deposits increased by $2.2 million during the six months ended March 31,
2003. 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
FHLB, the Bank can arrange to borrow an additional $15.2 million against our one
to four family mortgages. 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 $1.4 million in outstanding commitments to make loans at March 31,
2003, along with $1.2 million 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 March 31, 2003, we had
$19.1 million of time certificates scheduled to mature within 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 capital.

     We measure liquidity on a monthly basis and seek to maintain a liquidity
ratio of between 5% and 15%. At March 31, 2003, the ratio is 29.8% because we
have generated excess funds as deposits have increased and securities have
repaid faster than our loans have grown. We have placed these funds in short
term investments. We will continue to monitor this situation and adjust deposit
rates, invest funds in longer-term securities or pay off borrowed funds as
necessary.

     The OTS has minimum capital ratio requirements applying to the Bank, but
there are no comparable minimum capital requirements that apply to us as a
savings and loan holding company. At March 31, 2003, the Bank exceeded all
regulatory capital requirements of the OTS applicable to it, with Tier I capital
of $16.6 million, or 19.3% of adjusted total assets and with risk-based capital
of $17.4 million, or 39.5% of risk-weighted assets. The Bank also had tangible
capital of $16.6 million, or 19.3% of tangible assets. The Bank was classified
as "well capitalized" at March 31, 2003 under OTS regulations.

Item 3.  Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures. The term "disclosure
controls and procedures" is defined in Rule 13a-14(c) of the Securities Exchange
Act of 1934, or (the "Exchange Act"). This term refers to the controls and
procedures of a company that are designed to ensure that information required to
be disclosed by a company in the reports that it files under the Exchange Act is

                                       20
<PAGE>

recorded, processed, summarized and reported within required time periods. Our
Chief Executive Officer and our Chief Financial Officer have evaluated the
effectiveness of our disclosure controls an procedures as of a date within 90
days before the filing of this quarterly report, and they have concluded of this
date, our disclosure controls and procedures were effective at ensuring that
required information will be disclosed on a timely basis in our reports filed
under the Exchange Act.

(b) Changes in Internal Controls. There were no significant changes to our
internal controls or in the other factors that could significantly affect our
internal controls subsequent to the date of their evaluation by our Chief
Executive Officer and our Chief Financial Officer, including any corrective
actions with regard to significant deficiencies and material weakness.


                           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 advice 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 results of operations.

Item 4.  Submission of Matters to a Vote of Security Holders

At the annual meeting of stockholders held on February 18, 2003, the Company's
stockholders (i) elected three directors, Richard F. Bennett, Timothy J. Monroe
and Joseph C. Pistolesi, each to serve for a three-year term to expire at the
annual meeting of the stockholders to be held in 2006, and (ii) ratified an
amendment to the Company's SOP to provide that awards under the plan shall fully
vest in the event of a change in control of the Company or the Bank or upon
retirement of an option holder, (iii) ratified an amendment to the Company's MRP
to provide that awards under the plan shall fully vest in the event of a change
in control of the Company or the Bank or upon retirement of an award recipient
and (iv) ratified the appointment of Beard Miller Company LLP as the independent
public accountants for the fiscal year ending September 30, 2003. The terms of
office of directors Richard E. Jones, Robert J. Leader, Frank Langevin, and
Larry Straw all continued after the annual meeting.

Of the 2,277,884 shares entitled to vote proposition (i) at the meeting, a total
of 2,173,993 shares (95.44%) voted as follows:

      (i) ELECTION OF DIRECTORS:

                                    For          %        Withheld       %
                                 ---------      ----      --------      ----
        Richard F. Bennett       2,164,688      99.6        9,305        0.4
        Timothy J. Monroe        2,141,213      98.5       32,780        1.5
        Joseph C. Pistolesi      2,140,813      98.5       33,180        1.5

                                       21
<PAGE>

Of the 966,662 shares entitled to vote proposition (ii) at the meeting, a total
of 862,771 shares (89.25%) voted as follows:

      (ii) RATIFICATION OF AN AMENDMENT TO GOUVERNEUR BANCORP, INC. SOP:

             For          %         Against       %        Abstain       %
           -------       ----       -------      ----      -------      ----

           795,230       92.2        54,681       6.3       12,860       1.5

Of the 966,662 shares entitled to vote proposition (iii) at the meeting, a total
of 862,771 shares (89.25%) voted as follows:

      (iii) RATIFICATION OF AN AMENDMENT TO GOUVERNEUR BANCORP, INC. MRP:

             For          %         Against       %        Abstain       %
           -------       ----       -------      ----      -------      ----

           797,755       92.5        55,031       6.4        9,985       1.1

Of the 2,277,884 shares entitled to vote proposition (iv) at the meeting, a
total of 2,173,993 shares (95.44%) voted as follows:

      (iv) RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS:

             For          %         Against       %        Abstain       %
           -------       ----       -------      ----      -------      ----

         2,171,585       99.9           581       0.0        1,827       0.1

     Item 6.  Exhibits and Reports on Form 8-K

        (a)   Exhibits

              99.1   Certification of Chief Executive Officer Pursuant to 18
                     U.S.C. Section 1350, as adopted pursuant to Section 906 of
                     the Sarbanes-Oxley Act of 2003.

              99.2   Certification of Chief Financial Officer Pursuant to 18
                     U.S.C. Section 1350, as adopted pursuant to Section 906 of
                     the Sarbanes-Oxley Act of 2003.

        (b)   Reports on Form 8-K

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

                                       22
<PAGE>

                                   SIGNATURES

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

                                  Gouverneur Bancorp, Inc.


Date: May 12, 2003                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
                                      Vice President and Chief Financial Officer
                                      (principal financial officer duly
                                      authorized to sign on behalf of the
                                      registrant)

                                       23
<PAGE>

                                  Certification

I, Richard F. Bennett, Chief Executive Officer of the Company, certify that:

     1.   I have reviewed this quarterly report on Form 10-QSB of Gouverneur
          Bancorp, Inc.

     2.   Based on my knowledge, this quarterly report does not contain any
          untrue statement of material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statement were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in the report, fairly present in all material
          respects the financial condition, results of operations and cash flows
          of the registrant as of, and for, the periods presented in this
          quarterly report;

     4.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and we have:

          a) designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this quarterly
          report is being prepared;

          b) evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

          c) presented in this quarterly report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent function):

          a) all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

          b) any fraud, whether or not material, that involves management or
          other employees who have a significant role in the registrant's
          internal controls; and

          c) The registrant's other certifying officers and I have indicated in
          this quarterly report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to date of our most recent evaluation,
          including any corrective actions with regard to significant
          deficiencies and material weaknesses.

DATE:  May 12, 2003

/s/ RICHARD F. BENNETT
------------------------------
RICHARD F. BENNETT
CHIEF EXECUTIVE OFFICER

                                       24
<PAGE>

                                  Certification

I, Robert J. Twyman, Chief Financial Officer of the Company, certify that:

     1.   I have reviewed this quarterly report on Form 10-QSB of Gouverneur
          Bancorp, Inc.

     2.   Based on my knowledge, this quarterly report does not contain any
          untrue statement of material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statement were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in the report, fairly present in all material
          respects the financial condition, results of operations and cash flows
          of the registrant as of, and for, the periods presented in this
          quarterly report;

     4.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and we have:

          a) designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this quarterly
          report is being prepared;

          b)evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

          c) presented in this quarterly report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent function):

          a) all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

          b) any fraud, whether or not material, that involves management or
          other employees who have a significant role in the registrant's
          internal controls; and

     6.   The registrant's other certifying officers and I have indicated in
          this quarterly report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to date of our most recent evaluation,
          including any corrective actions with regard to significant
          deficiencies and material weaknesses.

DATE:  May 12, 2003

/s/ ROBERT J. TWYMAN
---------------------------
ROBERT J. TWYMAN
CHIEF FINANCIAL OFFICER

                                       25