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

                                    FORM 10-Q

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

                  For the quarterly period ended March 31, 1999

                                     0-24739
                             Commission File Number


                            CNY Financial Corporation
             (Exact name of registrant as specified in its charter)

             DELAWARE                                 16-1557490
  (State or other jurisdiction of                    (I.R.S. Employer
   incorporation or organization)                   Identification No.)



                              ONE NORTH MAIN STREET
                            CORTLAND, NEW YORK 13045
                    (Address of principal executive offices)

                                 (607) 756-5643
               Registrant's telephone number, including area code

                          COMMON STOCK, $0.01 PAR VALUE
           Securities registered pursuant to Section 12(g) of the Act


Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 day. (X) Yes ( ) No.

The  aggregate   market  value  of  the   registrant's   voting  stock  held  by
non-affiliates  of the registrant was  approximately  $51.8 million as of May 3,
1999. As of May 3, 1999,  the  registrant  had 5,088,829  shares of Common Stock
outstanding.

<PAGE>

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS


Part I.       FINANCIAL IMFORMATION

<S>                                                                                   <C>
         Item 1.  Financial Statements
                  Condensed Consolidated Balance Sheets..............................   1
                  Condensed Consolidated Statements of Income........................   2
                  Condensed Consolidated Statements of Cash Flows....................   3
                  Footnotes to Unaudited Condensed 
                    Consolidated Financial Statement.................................   4

         Item 2.  Management's Discussion and Analysis of 
                    Financial Condition and Results of Operation.....................   5

         Item 3   Quantitative and Qualitative Disclosures about Market Risk.........  12



Part II.      OTHER INFORMATION

         Item 4.  Submission of Matters to a Vote of Security Holders................  12

         Item 6.  (a)      Exhibits..................................................  13
                  (b)      Reports of Form 8-K.......................................  13
                           None

         Form 10-Q Signature Page....................................................  14
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                          CNY Financial Corporation and Subsidiary
                                            Condensed Consolidated Balance Sheet
                                              (In thousands, except share data)


                                                                                          March 31,            December 31,
                                                                                            1999                   1998
----------------------------------------------------------------------------------------------------------------------------
ASSETS                                                                                   (unaudited)
<S>                                                                                     <C>                      <C>      
Cash and due from banks                                                                 $   5,812                $   4,432
Interest-bearing balances at financial institutions and federal funds sold                  1,130                   10,104
Securities available-for-sale, at fair value                                               96,409                   88,437
Securities held-to-maturity (fair value of $9,324 in 1999 and $10,404                                       
     in 1998)                                                                               9,268                   10,318
Loans, net of deferred fees                                                               162,336                  161,701
Less allowance for loan losses                                                              2,569                    2,494
----------------------------------------------------------------------------------------------------------------------------
     Net loans                                                                            159,767                  159,207
Premises and equipment, net                                                                 3,239                    3,243
Federal Home Loan Bank stock, at cost                                                       1,637                    1,303
Other assets                                                                                4,661                    4,142
----------------------------------------------------------------------------------------------------------------------------
                                                                                        $ 281,923                $ 281,186
============================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
     Non-interest bearing demand accounts                                               $  10,658                $  10,780
     Interest bearing deposits                                                            184,749                  185,234
----------------------------------------------------------------------------------------------------------------------------
Total deposits                                                                            195,407                  196,014
Advance payments by borrowers for property taxes and insurance                                819                    1,450
Borrowings                                                                                  5,000                    1,000
Other liabilities                                                                           3,150                    3,652
----------------------------------------------------------------------------------------------------------------------------
     Total liabilities                                                                    204,376                  202,116
----------------------------------------------------------------------------------------------------------------------------
Stockholders' equity
     Common Stock, $0.01 par value, 8,500,000 shares authorized,
          5,356,662 shares issued and outstanding                                              54                       54
     Additional paid-in-capital                                                            51,298                   51,289
     Retained earnings                                                                     32,405                   31,848
     Treasury stock, at cost; 267,833 and 105,625 shares in 1999 and 1998                  (2,775)                  (1,067)
     Other equity                                                                          (3,435)                  (3,054)
----------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity                                                                 77,547                   79,070
----------------------------------------------------------------------------------------------------------------------------
                                                                                        $ 281,923                $ 281,186
============================================================================================================================

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

                                                             1

<PAGE>

<TABLE>
<CAPTION>
                         CNY Financial Corporation and Subsidiary
                              Condensed Statements of Income
                        Three Months Ended March 31, 1999 and 1998
                             (In thousands, except share data)
                                        (Unaudited)


                                                                  1999              1998
------------------------------------------------------------------------------------------
<S>                                                          <C>                 <C>     
Interest income
     Loans                                                   $    3,288          $  3,377
     Securities                                                   1,444               848
     Other short-term investments                                    84                86
------------------------------------------------------------------------------------------
Total interest income                                             4,816             4,311
Interest expense                                                                         
     Deposits                                                     1,775             2,010
     Borrowings                                                      17                --
------------------------------------------------------------------------------------------
Total interest expense                                            1,792             2,010
------------------------------------------------------------------------------------------
Net interest income                                               3,024             2,301
Provision for loan losses                                            75                75
------------------------------------------------------------------------------------------
Net interest income after provision for loan losses               2,949             2,226
Non-interest income
     Service charges                                                171               186
     Net gain on sale of securities                                  --                 6
     Other                                                           45                55
------------------------------------------------------------------------------------------
Total non-interest income                                           216               245
Non-interest expenses
     Salaries and employee benefits                                 928               812
     Building, occupancy and equipment                              222               214
     Other                                                          680               619
------------------------------------------------------------------------------------------
Total non-interest expenses                                       1,830             1,645
------------------------------------------------------------------------------------------
Income before income tax expense                                  1,335               826
Income tax expense                                                  586               333
------------------------------------------------------------------------------------------
Net income                                                   $      749          $    493
==========================================================================================
Basic earnings per share                                     $    0. 16               N/A
==========================================================================================
Weighted average shares outstanding                           4,711,725               N/A
==========================================================================================
</TABLE>

See  accompanying  notes  to  the  unaudited  condensed  consolidated  financial
statements.

                                            2

<PAGE>

<TABLE>
<CAPTION>

                                        CNY Financial Corporation and Subsidiary
                                     Condensed Consolidated Statements of Cash Flows
                                       Three Months Ended March 31, 1999 and 1998
                                                     (In thousands)
                                                       (Unaudited)


                                                                                     1999                        1998
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>                          <C>    
NET CASH PROVIDED BY OPERATING ACTIVITIES                                          $    410                    $  4,220

CASH  FLOWS FROM INVESTING ACTIVITIES:
     Proceeds from sales of securities available-for-sale                                --                       2,006
     Proceeds from maturities and principle reductions of available-for-
          sale securities                                                            25,407                       5,155
     Purchase of securities available-for-sale                                      (34,221)                     (8,214)
     Proceeds from maturities and principle reductions of held-to-
          maturity securities                                                         1,043                       1,593
     Purchases of securities held-to-maturity                                            --                      (1,522)
     Purchase of FHLB stock                                                            (334)                        (12)
     Net (increase) decrease in loans                                                  (635)                        542
     Proceeds from sale of real estate owned                                             --                         243
     Premises and equipment expenditures                                               (126)                       (117)
------------------------------------------------------------------------------------------------------------------------
 Net cash used in investing activities                                               (8,866)                       (326)
------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Decrease in deposits                                                              (607)                     (1,536)
     Decrease in advance payments by borrowers for property taxes and
          insurance                                                                    (631)                       (624)
     Net increase in Federal Home Loan Bank advances                                  4,000                          --
     Cash dividends on common stock                                                    (192)                         --
     Treasury stock purchased                                                        (1,708)                         --
------------------------------------------------------------------------------------------------------------------------
Net cash provided by (unused in) financing activities                                   862                      (2,160)
------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents                                 (7,594)                      1,734
Cash and cash equivalents at beginning of period                                     14,536                       8,079
------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                         $  6,942                    $  9,813
========================================================================================================================

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

                                                           3

<PAGE>

                    CNY Financial Corporation and Subsidiary
         Notes to Unaudited Condensed Consolidated Financial Statements


NOTE 1:  BASIS OF PRESENTATION

         The financial  information of CNY Financial  Corporation and subsidiary
         (the Company) included herein is unauditied;  however, such information
         reflects all adjustments  (consisting of normal recurring  adjustments)
         which are, in the opinion of management, necessary for a fair statement
         of results for the interim  periods.  The results of the interim period
         ended  March 31,  1999 are not  necessarily  indicative  of the results
         expected for the year ended December 31, 1999.

         The data in the condensed  consolidated  balance sheet for December 31,
         1998 was derived from the Company's 1998 Annual Report to Shareholders.
         That data, along with the other interim financial information presented
         in the condensed consolidated balance sheets, statements of income, and
         statements  of  cash  flows  should  be read in  conjunction  with  the
         consolidated   financial  statements,   including  the  notes  thereto,
         contained in the 1998 Annual Report to Shareholders.

NOTE 2:  EARNINGS PER SHARE

         Basic earnings per share is calculated by dividing net income available
         to  common  shareholders  by the  weighted  average  number  of  shares
         outstanding  during  the  period.  Prior to the  conversion  to a stock
         savings  bank,  earnings  per share are not  applicable  as the  mutual
         savings bank had no shares outstanding.  Unallocated shares held by the
         Company's  ESOP are not  included  in the  weighted  average  number of
         shares outstanding.

                                       4

<PAGE>

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

GENERAL

        CNY Financial Corporation,  a Delaware corporation  incorporated in 1998
(the "Company") is a bank holding company  headquartered  in Cortland,  New York
with total  assets of over $281  million at March 31,  1999.  Through its wholly
owned subsidiary, Cortland Savings Bank, which was founded in 1866 (the "Bank"),
the  Company  engages  in  full  service  community  banking.  The  Bank is also
headquartered  in  Cortland,  New York,  and has three full  service  offices in
Cortland County, and a loan production office in Ithaca, Tompkins County.

        The  Company  provides   community   banking   services,   primarily  to
individuals  and  small-to-medium-sized  businesses,  in Cortland County and the
neighboring counties.  These services include traditional  checking,  NOW, money
market,  savings and time deposit accounts. The Company offers home equity, home
mortgage,  commercial real estate,  commercial and consumer loans,  safe deposit
facilities and other services  specially tailored to meet the needs of customers
in its target markets.

         The  Company  commenced  operations  on October 6, 1998,  when the Bank
converted from a state chartered  mutual savings bank to a state chartered stock
savings bank.  References to the business  activities,  financial  condition and
operations  of the  Company  prior to October  6, 1998 refer to the Bank,  while
references  to the  Company on or after that date refer to both the  Company and
the Bank as consolidated, unless the context indicates otherwise.

         The Bank's result of operations depend  principally on its net interest
income,  which is the  difference  between  the  income  earned on its loans and
securities  and its cost of funds,  principally  interest paid on deposits.  Net
interest  income is  dependent  on the amounts  and yields of  interest  earning
assets as compared to the amounts of and rates on interest bearing  liabilities.
Net interest  income is sensitive to changes in market rates of interest and the
Company's  asset/liability  management  procedures  in coping with such changes.
Results of operations  are also  affected by the provision for loan losses,  the
volume of  non-performing  assets and the  levels of  non-interest  income,  and
non-interest expense.

         Sources  of  non-interest  income  include  categories  such as deposit
account fees and other service charges, gains on the sale of securities and fees
for  banking  services  such as safe  deposit  boxes.  The  largest  category of
non-interest  expense is  compensation  and benefits  expense.  Other  principal
categories of non-interest  expense are occupancy  expense and real estate owned
expense,  which  represents  expense in connection  with real estate acquired in
foreclosure or in satisfaction of a debt owed to the Company.

FINANCIAL CONDITION

         Total assets at March 31, 1999 were $281.9  million  compared to $281.2
million at December 31, 1998.  The primary cause of the $737,000  increase was a
$635,000 increase in loans, net of deferred fees which is attributed to new loan
closings exceeding paydowns.

         Additionally,  the Company repositioned a portion of its invested funds
in the first  quarter to take  advantage of higher rates  available by extending
the  average  maturity  of  investments.   The  Company's  securities  portfolio
increased  $6.9 million from the end of 1998 and totaled $105.7 million at March
31, 1999. The majority of purchases were 15 year mortgage-backed securities, and
were funded by a reduction in federal funds sold and  interest-bearing  balances
at other banks of $9.0 million.

         Total  deposits  declined  $607,000 from December 31, 1998, and totaled
$195.4 million at March 31, 1999. Now accounts  experienced  the largest decline
and were $10.5  million at March 31, 1999 compared with $11.1 million at the end
of  1998.  This  $645,000  decline  is  attributed  to the  timing  of  customer
transactions.

         Borrowings  were $5.0  million  and $1.0  million at March 31, 1999 and
December 31,  1998,  respectively.  This $4.0  increase was required to fund the
growth in assets, the decline in deposits and the stock repurchases discussed in
the following paragraph.

         Stockholders'  equity was $77.5  million at March 31, 1999  compared to
$79.1 million at December 31, 1998. The primary contributor to this $1.5 million
decline was completion of the Company's  previously  announced share  repurchase
program. 162,208 shares of the Company's common stock were purchased through the
end of January,  at an average price of $10.53 per share. These repurchases were
in addition to the 105,625 shares repurchased during December 1998, bringing the
total shares repurchased to 267,833 at an average price of $10.36. The impact of
these share repurchases has been a significant improvement in the Company's book
value per share which was $15.24 at March 31, 1999 compared to $15.06 at the end
of 1998.

                                       5

<PAGE>

OPERATING RESULTS

         Net income was  $749,000 or $0.16 per common share for the three months
ended March 31, 1999.  These results compare with net income of $493,000 for the
first quarter of 1998, and reflect a $256,000, or 51.9%, increase.

NET INTEREST INCOME

         The major source of earnings  for the Company is net  interest  income.
Net interest  income for the three months ended March 31, 1999 and 1998 was $3.0
million and $2.3 million,  respectively.  This $723,000 improvement is primarily
attributable  to the  investment  of  proceeds  received  from  the  conversion.
Competitive  pressures  and  overall  market  interest  rates  continued  to put
downward pressure on the Company's loan rates, however. The Company's annualized
yield on loans was 8.34% for the three  months  ended March 31,  1999,  compared
with 8.72% for the first quarter of 1998. This reduction was, however, offset by
the investment of the proceeds  received from the conversion,  which resulted in
improvement in the Company's net interest  margin to 4.62% for the quarter ended
March 31, 1999,  compared  with 4.27% for the three month period ended March 31,
1998.

         The following table sets forth the average daily balances, net interest
income and expense and average yields and rates for the Company's earning assets
and interest bearing  liabilities for the indicated  periods.  No tax-equivalent
adjustments were made.

<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED MARCH 31,
                                              ------------------------------------------------------------------------------
                                                               1999                                     1998
                                              ------------------------------------------------------------------------------
                                                                           AVERAGE                                  AVERAGE
                                                              AVERAGE       YIELD/                     AVERAGE       YIELD/
                                                INTEREST      BALANCE        COST        INTEREST      BALANCE        COST
----------------------------------------------------------------------------------------------------------------------------
                                                                           (Dollars in thousands)

<S>                                           <C>             <C>            <C>         <C>           <C>            <C>  
Loans (1)                                     $   3,288       $159,810       8.34%       $ 3,377       $157,134       8.72%
Securities (2)                                    1,444         97,965       5.98            848         54,852       6.27
Other short-term investments                         84          7,556       4.51             86          6,645       5.25
----------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets                     4,816        265,331       7.36%         4,311        218,631       8.00%
----------------------------------------------------------------------------------------------------------------------------
Non-interest-earning assets                                     12,070                                   13,553
----------------------------------------------------------------------------------------------------------------------------
Total assets                                                  $277,401                                 $232,184
============================================================================================================================

Savings accounts (3)                          $     378       $ 62,955       2.44%       $   474       $ 63,748       3.02%
Money market accounts                                47          7,947       2.40             57          8,385       2.76
NOW accounts                                         32         10,570       1.23             40          9,357       1.73
Certificates of deposits                          1,318        104,097       5.13          1,439        108,067       5.40
Borrowings                                           17          1,111       6.21             --             --         --
----------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities            $   1,792        186,680       3.89%       $ 2,010        189,557       4.30%
Non interest-bearing liabilities                                12,544                                   12,076
----------------------------------------------------------------------------------------------------------------------------
Total liabilities                                              199,224                                  201,633
Stockholders' equity                                            78,177                                   30,551
----------------------------------------------------------------------------------------------------------------------------
Total liabilities and equity                                  $277,401                                 $232,184
============================================================================================================================

Net interest income/spread                    $   3,024                      3.47%       $  2,301                     3.70%

Net earning assets/net interest margin                        $ 78,651       4.62%                     $ 29,074       4.27%

Ratio of average interest-earning assets
     to average interest-bearing liabilities                      1.42x                                    1.15x
============================================================================================================================

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

(1)  Average balances include loans held for sale and non-accrual  loans, net of the allowance for loan losses.  Interest is
     recognized on non-accrual loans only as and when received.

(2)  Securities  are  included at amortized  cost,  with net  unrealized  gains or losses on  securities  available-for-sale
     included as a component of non-earning assets. Securities include Federal Home Loan Bank stock.

(3)  Includes advance payments for taxes and insurance (mortgage escrow deposits).

</TABLE>

                                                             6

<PAGE>

CHANGES IN INTEREST INCOME AND EXPENSE

        One method of analyzing  net interest  income is to consider how changes
in average  balances  and  average  rates from one period to the next affect net
interest  income.  The  following  table  shows the dollar  amount of changes in
interest income and expense by major  categories of interest  earning assets and
interest bearing liabilities  attributable to changes in volume or rate or both,
for the periods indicated.

        Volume  variances are computed using the change in volume  multiplied by
the previous  year's rate. Rate variances are computed using the changes in rate
multiplied  by the previous  year's  volume.  The change in interest due to both
rate and volume has been  allocated  between  the factors in  proportion  to the
relationship of the absolute dollar amounts of the change in each.

<TABLE>
<CAPTION>
                                                                               THREE MONTHS ENDED MARCH 31,
                                                            -------------------------------------------------------------------
                                                                                      1999 VS. 1998
                                                            -------------------------------------------------------------------
                                                                               INCREASE (DECREASE) DUE TO:
                                                                   VOLUME                 RATE                   TOTAL
-------------------------------------------------------------------------------------------------------------------------------
                                                                                      (In thousands)
<S>                                                              <C>                      <C>                  <C>     
INTEREST-EARNING ASSETS:
Loans                                                            $    57                  $ (146)              $   (89)
Securities                                                           637                     (41)                  596
Other short-term investments                                          11                     (13)                   (2)
-------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets                                        705                    (200)                  505
-------------------------------------------------------------------------------------------------------------------------------

INTEREST-BEARING LIABILITIES:
Savings accounts                                                      (6)                    (90)                  (96)
Money market accounts                                                 (3)                     (7)                  (10)
NOW accounts                                                           5                     (13)                   (8)
Certificate of deposit                                               (52)                    (69)                 (121)
Borrowings                                                            17                      --                    17
-------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities                                   (39)                   (179)                 (218)
-------------------------------------------------------------------------------------------------------------------------------
NET CHANGE IN NET INTEREST INCOME                                 $  744                 $   (21)             $    723
===============================================================================================================================
</TABLE>

        PROVISION FOR LOAN LOSSES. The provision for loan losses was $75,000 for
the three months ended March 31, 1999 and was equivalent to the amount  recorded
in the first quarter of 1998.  This level of provision was  considered  adequate
given the Company's level of non-performing loans as shown in the table below.

        OTHER OPERATING EXPENSE.  Non-interest expense was $1.8 million and $1.6
million for the three  months ended March 31, 1999 and 1998,  respectively.  The
primary  contributor  to this  $185,000  increase  was a  $116,000  increase  in
salaries and employee  benefits  expense  primarily  attributable  to $61,000 of
expenses  recorded for the Company's ESOP and the hiring of  experienced  senior
personnel in 1998 and 1999.

        INCOME  TAXES.  Income tax expense for the quarter  ended March 31, 1999
was $586,000 compared with $333,000 for the same period in 1998,  representing a
$253,000  increase.  The increase is attributed to the improvement in net income
before taxes, the timing of various tax preference  items and the  establishment
of a wholly-owned Real Estate Investment Trust. The impact of these timing items
is expected to reverse in following  quarters,  thereby  reducing the  Company's
effective tax rate.


BUSINESS OF THE COMPANY

INVESTMENT ACTIVITIES

        GENERAL. The investment policy of the Company,  which is approved by the
Board of Directors,  is based upon its  asset/liability  management goals and is
designed primarily to provide  satisfactory  yields,  while maintaining adequate
liquidity, a balance of high quality, diversified investments, and minimal risk.
The  Company   generally   classifies   its  new   securities   investments   as
available-for-sale  in  order  to  maintain  flexibility  in  satisfying  future
investment and lending requirements.

                                                               7

<PAGE>


        The following table sets forth certain  information  with respect to the
Company's securities portfolio.

<TABLE>
<CAPTION>
                                             MARCH 31, 1999      DECEMBER 31, 1998
                                           -----------------------------------------
                                           AMORTIZED    FAIR     AMORTIZED   FAIR
                                             COST       VALUE      COST      VALUE
------------------------------------------------------------------------------------
                                                        (In thousands)
<S>                                        <C>        <C>        <C>        <C>     
SECURITIES AVAILABLE-FOR-SALE:
U.S. Treasury securities                   $  8,532   $  8,591   $  8,041   $  8,136
U.S. Government agencies                      4,997      4,989      4,996      5,028
Corporate debt obligations                   28,108     28,197     27,649     27,822
State and municipal sub-divisions               916        916        917        927
Mortgage-backed securities                   50,400     49,952     42,801     43,041
------------------------------------------------------------------------------------
Total debt securities                        92,953     92,645     84,404     84,954
Equity securities                             2,217      3,764      2,072      3,483
------------------------------------------------------------------------------------
Total available-for-sale                     95,170     96,409     86,476     88,437
------------------------------------------------------------------------------------
SECURITIES HELD-TO-MATURITY:
U.S. Government agencies                      1,005      1,002      1,505      1,507
Corporate debt obligations                    2,855      2,870      2,858      2,878
State and municipal sub-divisions               746        759        747        764
Mortgage-backed securities                    4,662      4,693      5,208      5,255
------------------------------------------------------------------------------------
Total held-to-maturity                        9,268      9,324     10,318     10,404
------------------------------------------------------------------------------------
TOTAL SECURITIES                           $104,438   $105,733   $ 96,794   $ 98,841
====================================================================================
</TABLE>


LENDING ACTIVITIES
         The loan  portfolio is the largest  category of the Company's  interest
earning assets.

         LOAN  PORTFOLIO  COMPOSITION.   The  following  table  sets  forth  the
composition of the Company's loan portfolio in dollar amounts and in percentages
at the dates indicated.

<TABLE>
<CAPTION>
                                            MARCH 31, 1999        DECEMBER 31, 1998
                                         --------------------------------------------
                                                     PERCENT                  PERCENT
                                          AMOUNT     OF TOTAL     AMOUNT     OF TOTAL
-------------------------------------------------------------------------------------
                                                   (Dollars in thousands)
<S>                                      <C>           <C>       <C>            <C>   
Real estate loans:
Residential                              $ 102,735     63.24%    $101,885       62.96%
Construction                                   220      0.14          145        0.09
Home equity                                  6,779      4.17        6,804        4.20
Commercial mortgages                        29,116     17.92       29,224       18.06
-------------------------------------------------------------------------------------
Total real estate loans                    138,850     85.47      138,058       85.31
-------------------------------------------------------------------------------------
Other loans:
Guaranteed student loans                     1,304      0.80        1,016        0.63
Property improvement loans                     656      0.40          709        0.44
Automobile loans                            10,751      6.62       10,854        6.71
Other consumer loans                         4,251      2.62        4,597        2.84
Commercial loans                             6,645      4.09        6,588        4.07
-------------------------------------------------------------------------------------
Total other loans                           23,607     14.53       23,764       14.69
-------------------------------------------------------------------------------------
Total loans                                162,457    100.00%     161,822      100.00%
Less:
Deferred loan fees, net                        121                    121
Allowance for loan losses                    2,569                  2,494
-------------------------------------------------------------------------------------
Total loans, net                         $ 159,767               $159,207
=====================================================================================
</TABLE>

                                       8
<PAGE>


ASSET QUALITY

        NON-PERFORMING LOANS.  Non-performing loans include: (1) loans accounted
for on a non-accrual  basis;  (2) accruing loans  contractually  past due ninety
days or more as to interest or  principal  payments;  (3) loans whose terms have
been  renegotiated  to provide a reduction  or deferral of interest or principal
because of a deterioration in the financial position of the borrower.

        The  following  table  provides  certain  information  on the  Company's
non-performing loans at the dates indicated.

<TABLE>
<CAPTION>
                                                              MARCH 31,    DECEMBER 31,
                                                                1999           1998
       --------------------------------------------------------------------------------
                                                              (Dollars in thousands)
<S>                                                           <C>              <C>  
       Non-accrual loans:
       Residential mortgages                                  $    974         $ 667
       Commercial mortgages                                        165           167
       --------------------------------------------------------------------------------
       Total real estate loans                                   1,139           834
       Commercial loans                                             70            71
       Other loans                                                  47            15
       --------------------------------------------------------------------------------
       Total non-accrual loans                                   1,256           920
       Accruing loans past due 90 days or more:                     --            --
       Residential mortgages                                        --            --
       Commercial mortgages                                         --            --
       --------------------------------------------------------------------------------
       Total real estate loans                                      --            --
       Commercial loans                                             --            11
       Other loans                                                   2             4
       --------------------------------------------------------------------------------
       Total loans past due 90 days or more and still
            accruing                                                 2            15
       --------------------------------------------------------------------------------
       Total non-performing loans                                1,258           935
       Real estate owned                                           260           260
       --------------------------------------------------------------------------------
       Total non-performing assets                             $ 1,518        $1,195
       ================================================================================
       Non-performing loans as a percent of total loans           0.77%         0.58%
       Non-performing assets as a percent of total assets         0.54%         0.42%
       ================================================================================
</TABLE>

        At March 31, 1999 there were no loans  other than those  included in the
table with regard to which  management had  information  about  possible  credit
problems of the borrower that caused  management to seriously  doubt the ability
of the borrower to comply with present loan repayment terms.

        ALLOWANCE  FOR LOAN LOSSES.  The allowance for loan losses is maintained
at a level considered adequate to provide for potential future losses. The level
of  the  allowance  is  based  upon  management's   periodic  and  comprehensive
evaluation  of the loan  portfolio,  as well as current and  projected  economic
conditions.  Reports  of  examination  furnished  by state and  federal  banking
authorities are also considered by management in this regard.  These evaluations
by management in assessing the adequacy of the allowance  include  consideration
of past loan loss experience,  changes in the composition of the loan portfolio,
the volume and condition of loans  outstanding  and current  market and economic
conditions.

        The  analysis  of the  adequacy  of the  allowance  is  reported  to and
reviewed by the Loan  Committee of the Board of  Directors of the Bank  monthly.
Management  believes it uses a reasonable  and prudent  methodology  to estimate
probable future losses in the loan  portfolio,  and hence assess the adequacy of
the allowance for loan losses.  However,  any such assessment is speculative and
future  adjustments  may be necessary if economic  conditions  or the  Company's
actual  experience  differ  substantially  from the  assumptions  upon which the
evaluation  of the  allowance  was  based.  Moreover,  future  additions  to the
allowance  may be necessary  based on changes in economic and real estate market
conditions,   new  information  regarding  existing  loans,   identification  of
additional  problem  loans  and  other  factors,  both  within  and  outside  of
management's control.

        Loans  are  charged  to  the  allowance  for  loan  losses  when  deemed
uncollectible by management,  unless  sufficient  collateral exists to repay the
loan.

                                       9
<PAGE>


        Set forth in the  following  table is an analysis of the  allowance  for
loan losses.

<TABLE>
<CAPTION>
                                                                           PERIOD ENDED MARCH 31,
                                                                           ----------------------
                                                                            1999          1998
-------------------------------------------------------------------------------------------------
                                                                           (Dollars in thousands)
<S>                                                                        <C>            <C>   
Allowance for loan losses, beginning of period                             $  2,494       $2,143
Provision for loan losses                                                        75           75
-------------------------------------------------------------------------------------------------
Charge-offs:
Real estate                                                                      --           --
Commercial                                                                       --           23
Other                                                                            21           16
-------------------------------------------------------------------------------------------------
Total charge-offs                                                                21           39
Recoveries:
Real estate                                                                       1           23
Commercial                                                                        3            9
Other                                                                            17           19
-------------------------------------------------------------------------------------------------
Total recoveries                                                                 21           51
-------------------------------------------------------------------------------------------------
Net charge-offs (recoveries)                                                     --          (12)
-------------------------------------------------------------------------------------------------
Allowance for loan losses, end of period                                   $  2,569       $2,230
=================================================================================================
Allowance for loan losses as a percent of total loans                         1.58%         1.43%
Allowance for loan losses as a percent of non-performing loans              204.21%       151.91%
Ratio of net charge-offs (recoveries) to average loans outstanding              --%        (0.01)%
=================================================================================================
</TABLE>

SOURCES OF FUNDS

         DEPOSITS.  The  Company's  primary  source  of funds is  deposits.  The
Company  offers several types of deposit  programs to its  customers,  including
passbook and statement  savings  accounts,  NOW accounts,  money market  deposit
accounts,  checking accounts and certificates of deposit. The Company's deposits
are obtained predominantly from its Cortland County market area.

        The following table sets forth deposits at the period indicated.

                                            MARCH 31, 1999    DECEMBER 31, 1998
-------------------------------------------------------------------------------
                                                      (In thousands)
Non-interest bearing demand accounts          $   10,658         $    10,780
Savings accounts                                  62,268              61,820
Certificates of deposit                          104,029             104,317
Money market accounts                              7,975               7,975
NOW accounts                                      10,477              11,122
-------------------------------------------------------------------------------
Total deposits                                $  195,407         $   196,014
===============================================================================

         BORROWINGS. The Company maintains an available overnight line of credit
with the  Federal  Home  Loan  Bank of New York  (FHLB)  for use in the event of
unanticipated  funding  needs  which  cannot be  satisfied  from other  sources.
Additionally, the Company may borrow term advances for the FHLB. The Company had
$5 million of borrowings from the FHLB at March 31, 1999.

LIQUIDITY AND CAPITAL

         SHAREHOLDERS'  EQUITY AND CAPITAL  STANDARDS.  The Company and the Bank
are subject to capital adequacy requirements  established by the federal banking
agencies.

         At March  31,  1999,  the  Company  and Bank met all  capital  adequacy
requirements to which they were subject.

                                       10
<PAGE>


         The following is a summary of the  Company's and Bank's actual  capital
amounts  and  ratios  compared  to  the  regulatory   minimum  capital  adequacy
requirements and the FDIC requirements for classification of the Bank as a "well
capitalized"  institution under prompt corrective action provisions  (dollars in
thousands):

<TABLE>
<CAPTION>
                                                                                                       To be classified as
                                                                              Minimum capital         well capitalized under
                                                                                 adequacy               prompt corrective
                                                        Actual                 requirements              action provisions
                                                -----------------------------------------------------------------------------
                                                 Amount          Ratio      Amount        Ratio         Amount        Ratio
-----------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>              <C>       <C>              <C>        <C>           <C>   
At March 31, 1999:
TOTAL CAPITAL (TO RISK WEIGHTED ASSETS):
     Company                                    $ 78,674         47.77%    $  13,176     => 8.00%           N/A
     Bank                                         61,250         39.53        12,397     => 8.00%      $ 15,496      => 10.00%
TIER 1 CAPITAL (TO RISK WEIGHTED ASSETS):
     Company                                      75,945         46.15         6,588     => 4.00%           N/A
     Bank                                         58,609         37.82         6,198     => 4.00%         9,297      =>  6.00%
TIER 1 CAPITAL (TO AVERAGE ASSETS):
     Company                                      75,945         27.38        11,096     => 4.00%           N/A
     Bank                                       $ 58,609         21.96%    $  10,677     => 4.00%      $ 13,347      =>  5.00%
=============================================================================================================================
</TABLE>


         OPERATING INVESTING AND FINANCING ACTIVITIES.  The Company's cash flows
are composed of three  classifications:  cash flows from  operating  activities,
cash flows from investing activities,  and cash flows from financing activities.
Net cash provided by operating  activities  consists primarily of earnings.  Net
cash  provided by  operating  activities  was  $410,000 and $4.2 million for the
three  months  ended  March  31,  1999  and  1998,  respectively.   The  primary
contributor  to this $3.8  million  decline  was the $3.1  million  of  proceeds
received from the sale of problem loans in the first quarter of 1998.  There was
no such  transaction  in 1999.  Net cash used in investing  activities  consists
principally  of  securities  and loan  transactions.  Net cash used in investing
activities  was $8.9  million and  $326,000 for the three months ended March 31,
1999 and 1998,  respectively.  The  primary  contributor  to this  $8.5  million
increase was the redeployment of short-term  funds into longer-term  investments
as discussed in  "Financial  Condition."  Cash flows from  financing  activities
consist  principally  of deposit flows and borrowing  transactions.  Net cash of
$862,000  was provided by financing  transactions  in the first  quarter of 1999
compared  to cash used by  financing  activities  of $2.2  million for the three
months ended March 31, 1998. This $3.0 million change is primarily attributed to
the $4.0 million borrowing  partially offset by treasury stock purchases of $1.7
million, both as previously discussed.

YEAR 2000 CONSEQUENCES

         The  information  contained  in this  section  represents  a Year  2000
Readiness  Disclosure under the Year 2000  Information and Readiness  Disclosure
Act.

         The operations of the Company are substantially dependent upon computer
data processing for its deposit accounts, loans, and financial records and other
matters.  Many computer systems and other equipment  containing  microchips will
not operate  accurately  after  January 1, 2000.  The Company has  undertaken  a
comprehensive  review of all systems believed to create potential risks in order
to eliminate any Year 2000 operating difficulties.

         Since the end of 1998,  the  Company has  continued  the testing of its
computer  chip  reliant  systems  and has not  identified  any  major or  costly
performance deficiencies. Testing will continue through 1999.

FORWARD-LOOKING STATEMENTS

        In this Form 10-Q,  the Company,  when  discussing  the future,  may use
words  like  "will  probably  result",  "are  expected  to",  "may  cause",  "is
anticipated",  "estimate",  "project",  or similar words.  These words represent
forward-looking  statements.  In  addition,  any analysis of the adequacy of the
allowance  for loan losses or the interest  rate  sensitivity  of the  Company's
assets  and  liabilities,  represent  attempts  to  predict  future  events  and
circumstances and also represent forward-looking statements.

        Many  factors  could  cause  future  results  to  differ  from  what  is
anticipated in the  forward-looking  statements.  For example,  future financial
results could be affected by (i) deterioration in 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; (ii)

                                       11
<PAGE>


changes  in  market  interest  rates or  changes  in the  speed at which  market
interest  rates  change;  (iii)  changes in laws and  regulations  affecting the
financial  service  industry;  (iv)  changes in  competition  and (v) changes in
consumer preferences.

        Please  do  not  place   unjustified   or  excessive   reliance  on  any
forward-looking  statements.  They  speak  only as of the date  made and are not
guarantees,  promises or assurances of what will happen in the future.  Remember
that  various  factors,  including  those  described  above,  could  affect  the
Company's financial  performance and could cause the Company's actual results or
circumstances  for future periods to be materially  different from what has been
anticipated or projected.

ITEM 3.   QUANTITATIVE AND QUALITATITIVE DISCLOSURES ABOUT MARKET RISK

         For information concerning CNY Financial Corporation's quantitative and
qualitative disclosures about market risk, refer to Item 7A of the CNY Financial
Corporation  Annual Report on Form 10-K for the year ended  December 31, 1998 as
filed with the  Securities  and  Exchange  Commission  on March 26, 1999 and the
sections of the Annual Report to Stockholders referenced therein and included in
such report on form 10-K,  particularly  the discussion at pages 9 and 10 of the
Annual Report to Stockholders under the caption "Asset/Liability  Management and
Market Risk." There has been no material changes since December 31, 1998.

PART II

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

         CNY Financial  Corporation  had an annual  meeting of  stockholders  on
April 28, 1999. At the meeting, Patrick J. Hayes, Robert S. Kashdin and Lawrence
Seidman were elected as  directors.  The terms of office of directors  Joseph H.
Compagni,  Harvey  Kaufman,  Donald P. Reed,  Terrance D.  Stalder and Wesley D.
Stisser continue after the meeting.

         In addition to the election of directors,  stockholders  voted upon (i)
the approval of a stock  option plan which  provides for the award of options to
purchase  up to  535,662  shares  of  stock  of  CNY  Financial  Corporation  to
directors,  officers and employees; (ii) the approval of a Personnel Recognition
and  Retention  Plan which  provides  for the award of up to  214,266  shares of
restricted  stock  of CNY  Financial  Corporation  to  directors,  officers  and
employees;  and  (iii)  the  ratification  of the  appointment  of  KPMG  LLP as
auditors.

         The votes cast for all  nominees  for  directors,  and the votes on the
other three matters, were as follows:

         The election of directors:

                      Name                                    For       Withheld
                      ----                                    ---       --------

                Patrick J. Hayes                           4,346,133     106,798
                Robert S. Kashdin                          4,365,951      87,371
                Lawrence B. Seidman                        4,061,951     390,980
                No other person received votes.

         The stock option plan:
                For                                        2,816,064
                Against                                      538,691
                Abstain                                       54,290
                Broker non-votes                           1,043,886

         The Personnel Recognition and Retention Plan:
                For                                        2,721,904
                Against                                      599,761
                Abstain                                       87,380
                Broker non-votes                           1,043,886

         The ratification of the appointment of auditors:
                For                                        4,311,660
                Against                                       73,536
                Abstain                                       67,735

                                       12
<PAGE>


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
(a)      Documents filed as part of this report:

         3.0      EXHIBITS

                  3.1    Certificate   of    Incorporation    of   the   Company
                         (incorporated  by  reference  to  Exhibit  3.1  of  the
                         Company's   Form  S-1   Registration   Statement   (No.
                         333-57259)  filed  with  the  Securities  and  Exchange
                         Commission on June 19, 1998).

                  3.2    Bylaws of the Company  (incorporated  by  reference  to
                         Exhibit  3.2 of the  Company's  Form  S-1  Registration
                         Statement (No. 333-57259) filed with the Securities and
                         Exchange Commission on June 19, 1998).

                  27.1   Financial Data Schedule.

(b)      Reports on Form 8-K

         None.

                                       13
<PAGE>


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) 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.


                               CNY FINANCIAL CORP.


    By:  /s/   WESLEY D. STISSER                                     May 6, 1999
         --------------------------------------------------------    -----------
               Wesley D. Stisser                                       (Dated) 
               President & Chief Executive Officer                       

         /s/   STEVEN A. COVERT                                      May 6, 1999
         --------------------------------------------------------    -----------
               Steven A. Covert                                        (Dated) 
               Executive Vice President & Chief Financial Officer      


                                       14
<PAGE>


                                Index To Exhibits


     3.1        Certificate of Incorporation of the Company*
     3.2        Bylaws of the Company*
    27.1        Financial Data Schedule


*Previously filed.