SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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


                                    FORM 10-Q

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

          For the quarterly period ended: DECEMBER 31, 1999
                                         -------------------

                                       OR

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

          For the transition period from _________ to _________


                       Commission file number: 000-25439

                           TROY FINANCIAL CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          Delaware                                               16-1559508
---------------------------------                            -------------------
(State or other jurisdiction                                 (I.R.S. Employer
of incorporation or organization)                            Identification No.)


                     32 Second Street, Troy, New York 12180
              ----------------------------------------------------
               (Address of principal executive offices)(Zip Code)

                                  (518)270-3313
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

                                 not applicable
              ----------------------------------------------------
                 (Former name, former address and former fiscal
                       year, if changed since last report)

     Indicate  by check  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 days. YES: [X] NO: [ ]

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common  stock,  as of the latest  practicable  date: AS OF FEBRUARY 10, 2000:
11,438,086 SHARES OF COMMON STOCK, PAR VALUE $.0001 PER SHARE.


<PAGE>



                                      INDEX

PART I - FINANCIAL INFORMATION

                                                                            PAGE

Item 1:   Financial Statements


               Consolidated Statements of Condition, December 31,
                  1999 (unaudited) and September 30, 1999 ..............       1

               Consolidated Statements of Income, Three Months
                  Ended December 31, 1999 and 1998 (unaudited) .........       2

               Consolidated Statements of Cash Flows, Three Months
                  Ended December 31, 1999 and 1998 (unaudited) .........       3

               Consolidated Statements of Changes in
                  Shareholders' Equity, Three Months
                  Ended December 31, 1999 and 1998 (unaudited) .........       4

               Notes to Unaudited Consolidated Interim
                  Financial Statements .................................       5

Item 2:   Management's Discussion and Analysis of
             Financial Condition and Results of Operations .............       6

Item 3:   Quantitative and Qualitative Disclosures About Market Risk ...       7


PART II - OTHER INFORMATION

          Items 1-6.....................................................    II-1

          Signature page................................................    II-2




<PAGE>






PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

















<PAGE>


          TROY FINANCIAL CORPORATION
          CONSOLIDATED STATEMENTS OF CONDITION

<TABLE>
<CAPTION>
                                                                         DECEMBER 31, 1999      SEPTEMBER 30, 1999
                                                                         -----------------      ------------------
               ASSETS                                                    (IN THOUSANDS, EXCEPT SHARE DATA)
               ------                                                     (Unaudited)
<S>                                                                         <C>                     <C>
Cash & due from banks                                                       $ 39,928                $ 35,885
Federal funds sold                                                             3,741                      50
                                                                            --------                --------
          Total cash and cash equivalents                                     43,669                  35,935
Loans held for sale                                                            1,922                   4,064
Securities available for sale, at fair value                                 246,435                 280,871
Investment securities held to maturity ( fair value of $2,486 and $2,582
       at December 31, 1999 and September 30, 1999, respectively)              2,486                   2,534
Net loans receivable                                                         580,955                 556,142
Accrued interest receivable                                                    4,938                   5,270
Other real estate owned                                                        2,783                   1,845
Premises & equipment, net                                                     15,793                  15,049
Other assets                                                                  15,824                  13,386
                                                                            --------                --------
        Total assets                                                        $914,805                $915,096
                                                                            --------                --------

               LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
      Deposits:
         Savings accounts                                                    188,006                 191,968
         Money market accounts                                                18,089                  20,348
         N.O.W. and demand accounts                                          130,288                 123,345
         Time accounts                                                       220,876                 227,712
                                                                            --------                --------
              Total deposits                                                 557,259                 563,373
      Mortgagors' escrow accounts                                              3,951                   1,596
      Securities sold under agreements to repurchase                          93,933                   3,736
      Short-term borrowings                                                   25,000                 100,700
      Long-term debt                                                          44,382                  44,497
      Accrued interest payable                                                   646                     487
      Official bank checks                                                     8,381                   9,651
      Contributions payable                                                    2,718                   2,664
      Other liabilities and accrued expenses                                   7,971                   7,953
                                                                            --------                --------
              Total liabilities                                              744,241                 734,657


Shareholders' Equity:
      Preferred Stock, $.0001 par value; 15,000,000 shares authorized,
         none issued                                                              --                      --
      Common Stock, $.0001 par value; 60,000,000 shares authorized,
         12,139,021 issued at December 31, 1999 and September 30, 1999             1                       1
      Additional paid in capital                                             117,804                 117,759
      Unallocated common stock held by ESOP                                   -9,027                  -9,620
      Unvested restricted stock awards                                        -4,583                      --
      Treasury stock, at cost                                                 -6,488                      --
      Retained earnings, substantially restricted                             73,837                  72,699
      Accumulated other comprehensive loss                                      -980                    -400
                                                                            --------                --------
              Total shareholders' equity                                     170,564                 180,439
                                                                            --------                --------
                       Total liabilities and shareholders' equity           $914,805                $915,096
                                                                            --------                --------
</TABLE>


 See accompanying notes to unaudited consolidated interim financial statements.


                                       1

<PAGE>

          TROY FINANCIAL CORPORATION
          CONSOLIDATED STATEMENTS OF INCOME
          (Unaudited)

<TABLE>
<CAPTION>
                                                               FOR THE THREE MONTHS
                                                               ENDED DECEMBER 31,
                                                               ------------------
                                                               (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                                    1999                  1998
                                                                  -------               -------
<S>                                                               <C>                   <C>
Interest & dividend income:
     Interest and fees on loans                                   $11,252               $ 9,618
     Securities available for sale:
          Taxable                                                   1,870                 1,832
          Tax exempt                                                  701                   512
                                                                  -------               -------
                                                                    2,571                 2,344
     Investment securities held to maturity                            50                    62
     Federal funds sold                                               171                   143
                                                                  -------               -------
          Total interest and dividend income                       14,044                12,167
                                                                  -------               -------

Interest expense:
     Deposits and escrow accounts                                   4,656                 5,449
     Short-term borrowings                                            602                    41
     Long-term debt                                                   651                   710
                                                                  -------               -------
          Total interest expense                                    5,909                 6,200
                                                                  -------               -------
          Net interest income                                       8,135                 5,967
     Provision for loan losses                                        800                   813
                                                                  -------               -------
          Net interest income after provision for loan losses       7,335                 5,154
                                                                  -------               -------

Non-interest income:
     Service charges on deposits                                      261                   230
     Loan servicing fees                                              132                   126
     Trust service fees                                               202                   150
     Net gains from securities transactions                             3                     8
     Net losses from mortgage loan sales                              -23                   -12
     Other income                                                     576                   121
                                                                  -------               -------
          Total non-interest income                                 1,151                   623
                                                                  -------               -------

Non-interest expense:
     Compensation & employee benefits                               3,088                 2,732
     Occupancy                                                        465                   505
     Furniture, fixtures, & equipment                                 194                   173
     Computer charges                                                 434                   392
     Professional, legal and other fees                               409                   181
     Printing, postage and telephone                                  234                   152
     Other real estate owned                                          103                    66
     Contributions                                                     72                    70
     Other                                                            888                   570
                                                                  -------               -------
          Total non-interest expense                                5,887                 4,841
                                                                  -------               -------
Income before income tax expense                                    2,599                   936
Income tax expense                                                    719                   233
                                                                  -------               -------
Net income                                                        $ 1,880               $   703
                                                                  -------               -------

     Earnings per share:
          Basic                                                   $  0.18                   n/a
          Diluted                                                 $  0.18                   n/a
</TABLE>

     Earnings per share calculations are not applicable for periods prior to the
     initial public offering on March 31, 1999.

 See accompanying notes to unaudited consolidated interim financial statements.


                                       2
<PAGE>
TROY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
                                                                                              For the three months ended
                                                                                             December 31,     December 31,
(in thousands, except share and per share data)                                              1999             1998
<S>                                                                                            <C>             <C>
     COMMON STOCK
         Balance at beginning of period                                                        $       1              --

         Balance at end of period                                                              $       1              --

     ADDITIONAL PAID-IN CAPITAL

         Balance at beginning of period                                                        $ 117,759              --

         Adjustment for ESOP shares released for allocation                                           45              --

         Balance at end of period                                                              $ 117,804              --

     UNALLOCATED COMMON STOCK HELD BY ESOP

         Balance at beginning of period                                                        $  (9,620)             --

         ESOP shares released for allocation                                                         593              --

         Balance at end of period                                                              $  (9,027)             --

     UNVESTED RESTRICTED STOCK AWARDS

         Balance at beginning of period                                                        $      --              --

         Grant of  restricted stock awards (446,165 shares)                                       (4,824)             --

         Amortization of restricted stock awards                                                     241              --

         Balance at end of period                                                              $  (4,583)             --

     TREASURY STOCK

         Balance at beginning of period                                                        $      --              --

         Purchase of treasury stock                                                              (11,447)             --

         Grant of restricted stock awards (446,165 shares)                                         4,959              --

         Balance at end of period                                                              $  (6,488)             --

     RETAINED EARNINGS

         Balance at beginning of period                                                        $  72,699       $  70,622

         Net income                                                                            $   1,880       $     703

         Cash dividend                                                                              (607)

         Adjustment for grant of restricted stock awards                                            (135)

         Balance at end of period                                                              $  73,837       $  71,325

     ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

         Balance at beginning of period                                                        $    (400)      $     407

         Unrealized net holding losses on securities available for sale arising during the
         period (pre-tax  ($963) and ($17))                                                         (578)            (10)

         Reclassification adjustment for net gains on securities available for sale
          realized in net income, (pre-tax  $3 and $8)                                                (2)             (5)

         Other comprehensive loss                                                              $    (580)      $     (15)

             Comprehensive income                                                              $   1,300       $     688
                                                                                               ---------       ---------

         Balance at end of period                                                              $    (980)      $     392

         Total shareholders' equity at December 31,                                            $ 170,564       $  71,717
</TABLE>

  See accompanying notes to unaudited consolidated interim financial statements

                                       3
<PAGE>

TROY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
                                                               FOR THE THREE MONTHS ENDED
                                                                DECEMBER 31, 1999    DECEMBER 31, 1998
                                                               --------------------  -------------------
                                                               (in thousands)
<S>                                                                                         <C>               <C>
INCREASE  (DECREASE)  IN CASH AND CASH  EQUIVALENTS:  CASH FLOWS FROM  OPERATING
   ACTIVITIES:
      Net income                                                                               1,880             703
      Adjustments to reconcile net income to net cash provided by (used in)
       operating activities:
         Depreciation and amortization                                                           319             330
         Provision for loan losses                                                               800             813
         Amortization of restricted stock awards                                                 241              --
         ESOP compensation expense                                                               638              --
         Net accretion of premium/discount on securities                                        (362)           (819)
         Net gains from securities transactions                                                   (3)             (8)
         Net gain from mortgage loan sales                                                        23              12
         Net gain on sale of other real estate owned                                             (28)             --
         Writedowns of other real estate owned                                                    13              17
         Proceeds from sales of loans held for sale                                            5,842          15,870
         Net loans made to customers and held for sale                                        (3,723)        (15,565)
         Decrease in accrued interest receivable                                                 332             123
         Increase in other assets                                                             (2,054)           (404)
         Increase in accrued interest payable                                                    159             300
         Decrease in official bank checks, contributions payable,
            accrued expenses and other liabilities                                            (1,198)         (1,961)
                                                                                             -------         -------
            Total adjustments                                                                  1,328          (1,292)
                                                                                             -------         -------
            Net cash provided by (used in) operating activities                                2,879            (589)
                                                                                             -------         -------

   CASH FLOWS FROM INVESTING ACTIVITIES:
         Proceeds from sale of securities available for sale                                  18,493              --
         Proceeds from maturity and paydown of securities AFS                                142,242          67,955
         Purchases of securities available for sale                                         (126,898)        (67,555)
         Proceeds from maturity of investment securities                                          48             632
         Proceeds from sale of other real estate owned                                         2,458              97
         Net loans made to customers                                                         (28,994)        (22,799)
         Capital expenditures                                                                 (1,063)         (1,222)
            Net cash provided by (used in) investing activities                                6,286         (22,892)
                                                                                             -------         -------

   CASH FLOWS FROM FINANCING ACTIVITIES:
         Net (decrease) increase in deposits                                                  (6,114)         10,291
         Increase in mortgagors' escrow accounts                                               2,355           1,839
         Net increase in securities sold under agreements to repurchase                       90,197           1,329
         Net decrease (increase ) in short term borrowings                                   (75,700)          9,700
         Payments on long term debt                                                             (115)           (109)
         Cash dividends paid                                                                    (607)             --
         Purchase of treasury stock                                                          (11,447)             --
                                                                                             -------         -------
            Net cash (used in) provided by financing activities                               (1,431)         23,050
                                                                                             -------         -------

Net increase (decrease) in cash and cash equivalents                                           7,734            (431)
                                                                                             -------         -------

Cash and cash equivalents at beginning of period                                              35,935          17,915
                                                                                             -------         -------

Cash and cash equivalents at end of period                                                    43,669          17,484
                                                                                             -------         -------

SUPPLEMENTAL INFORMATION
   CASH PAID FOR:
      Interest on deposits and borrowings                                                      5,750           5,900
      Income taxes                                                                               105              50

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
      Net reduction in loans resulting from the transfer  to other real estated                3,381              86
      Adjustment of securities available for sale to fair value, net of tax                     (580)            (15)
      Grant of restricted stock awards                                                         4,824              --
</TABLE>

 See accompanying notes to unaudited consolidated interim financial statements

                                       4
<PAGE>



                         Notes to Unaudited Consolidated
                          Interim Financial Statements

Note 1. Basis of Presentation

The unaudited  consolidated interim financial statements include the accounts of
Troy Financial Corporation (the "Company") and its wholly owned subsidiary,  The
Troy Savings Bank (the "Bank"), and the Bank's subsidiaries.  The Company became
the bank  holding  company  of the  Bank on March  31,  1999.  Accordingly,  all
financial  data as of and for  periods  prior to such date are the  consolidated
data of the  Bank and its  subsidiaries.  The  September  30,  1999  data in the
Consolidated  Statements  of  Condition is derived  from the  Company's  audited
consolidated  financial  statements.  All intercompany accounts and transactions
have been  eliminated  in  consolidation.  The  unaudited  consolidated  interim
financial  statements reflect all adjustments of a normal recurring nature which
are necessary  for a fair  presentation  of the results for the interim  periods
presented  and should be read in  conjunction  with the  consolidated  financial
statements  and related notes  included in the  Company's  annual report on Form
10-K as of and for the year ended  September 30, 1999. The results of operations
for the  interim  periods  are not  necessarily  indicative  of the  results  of
operations  to be expected  for the full fiscal year ended  September  30, 2000.
Reclasses  are  made   whenever   necessary  to  conform  to  the  current  year
presentation.

Note 2. Earnings Per Share

Basic  earnings per share is  calculated  by dividing net income by the weighted
average  number  of common  shares  outstanding  during  the  period.  Shares of
restricted  stock are not considered  outstanding  for the  calculation of basic
earnings per share until they become fully vested. Diluted earnings per share is
calculated  in a manner  similar to basic  earnings  per share  except  that the
weighted-average number of common shares outstanding is increased to include the
number of  additional  common  shares  that would have been  outstanding  if all
potentially  dilutive  common  shares  ( such  as  stock  options  and  unvested
restricted stock ) were issued during the reporting period.  Unallocated  common
shares  held by the ESOP are not  included  in the  weighted-average  number  of
common  shares  outstanding  for either the basic or diluted  earnings per share
calculations.

The following table sets forth certain information  regarding the calculation of
basic and diluted  earnings per share for the three month period ended  December
31, 1999:


For the Three Months Ended
December 31, 1999
( in thousands, except share and per share data )
<TABLE>
<CAPTION>
                                                                     Weighted           Per
                                                  Net                Average            Share
                                                  Income             Shares             Amount
                                                  ------             ------             ------
<S>                                               <C>              <C>                   <C>
Basic earnings per share                          $1,880           10,709,491            $0.18
                                                  ------           ----------            -----

Effect of potential common shares outstanding                           9,745
                                                                        -----

Diluted earnings per share                        $1,880           10,719,236            $0.18
                                                  ------           ----------            -----
</TABLE>


                                       5
<PAGE>



Note 3. Comprehensive Income

Comprehensive  income  includes the reported net income of the Company  adjusted
for items that are currently  accounted for as direct entries to equity, such as
the mark to market adjustment on securities available for sale, foreign currency
items and minimum pension liability adjustments.  At the Company,  comprehensive
income  represents  net income plus other  comprehensive  income or loss,  which
consists of the net change in unrealized gains or losses on securities available
for  sale  for  the  period.  Accumulated  other  comprehensive  income  or loss
represents the net unrealized gains or losses on securities  available for sale,
net of tax, as of the balance sheet dates.

Note 4. Impact of New Accounting Standards

In June 1998, FASB issued SFAS No. 133,  "Accounting for Derivative  Instruments
and Hedging  Activities," which establishes  accounting and reporting  standards
for derivative instruments, including certain derivative instruments embedded in
other  contracts,  and for hedging  activities.  In May 1999, this statement was
delayed  by the  FASB;  consequently  it will now be  effective  for all  fiscal
quarters of fiscal years beginning after June 15, 2000.  Management is currently
evaluating the impact of this Statement on the Company's  consolidated financial
statements.

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

GENERAL

     Troy Financial  Corporation (the "Company" ) was formed in December 1998 to
acquire all of the capital  stock of The Troy Savings Bank (the "Bank") upon the
Bank's  conversion  from  a New  York-chartered  mutual  savings  bank  to a New
York-chartered stock savings bank. Upon the Bank's conversion on March 31, 1999,
the Company completed its initial public offering of stock,  issuing  12,139,021
shares of common stock, par value $.0001 per share ("Common  Stock"),  including
408,446 shares  contributed to The Troy Savings Bank Community  Foundation ( the
"Foundation").  The Company sold 11,730,575 shares of Common Stock at a price of
$10 per share through a subscription offering to certain depositors of the Bank.
Net  proceeds  to the  Company  from the  offering  were  $113.7  million  after
conversion  costs and offering costs.  The Company  invested  approximately  $57
million of the net  proceeds  to acquire  the Bank,  and the  Company  used $9.6
million of the net  proceeds  from the  conversion  to fund a loan to the Bank's
employee  stock  ownership plan (the "ESOP" ) which allowed the ESOP to purchase
971,122 shares of Common Stock in the open market. The Company's Common Stock is
traded on the NASDAQ Stock Market National Market Tier under the symbol "TRYF."

     The consolidated  financial  condition and operating results of the Company
are primarily  dependent  upon its wholly owned  subsidiary,  the Bank,  and the
Bank's subsidiaries,  and all references to the Company prior to March 31, 1999,
except where otherwise indicated, are to the Bank.

     The Bank is a community based, full service financial  institution offering
a wide  variety  of  business  and  retail  banking  products.  The Bank and its
subsidiaries  also  offer a full  range  of  trust,  insurance,  and  investment
services. The Bank's primary sources of funds are deposits and borrowings, which
it uses to originate real estate  mortgages,  both  residential  and commercial,
commercial business loans, and consumer loans throughout its primary market area
which   consists   of  the  six  New  York   counties   of   Albany,   Saratoga,
Schenectady,Warren, Washington, and Rensselaer (Troy).


                                       6

<PAGE>

     The Company's profitability, like many financial institutions, is dependent
to a large extent upon its net interest income,  which is the difference between
the  interest  it  receives  on  interest  earning  assets,  such as  loans  and
investments,   and  the  interest  it  pays  on  interest  bearing  liabilities,
principally deposits and borrowings.

     Results of operations  are also  affected by the Bank's  provision for loan
losses, non- interest expenses such as salaries and employee benefits, occupancy
and other operating expenses and to a lesser extent, non-interest income such as
trust service fees, loan servicing fees and service charges on deposit accounts.
Financial  institutions  in general,  including the Company,  are  significantly
affected  by  economic  conditions,  competition  and the  monetary  and  fiscal
policies of the federal  government.  Lending  activities  are influenced by the
demand for and supply of  housing,  competition  among  lenders,  interest  rate
conditions  and  funds  availability.  Deposit  balances  and cost of funds  are
influenced  by  prevailing  market  rates  on  competing  investments,  customer
preferences  and levels of  personal  income and  savings in the Bank's  primary
market area.

FINANCIAL CONDITION

The Company's  total assets were $914.8 million at December 31, 1999, a decrease
of $291,000,  or .03% from the $915.1  million at September  30, 1999.  Cash and
cash  equivalents  were $43.7  million at December 31, 1999, an increase of $7.7
million  from the  $35.9  million  at  September  30,  1999.  The  increase  was
principally  due  to the  Bank's  decision  to  hold  excess  cash  reserves  in
anticipation  of an increased  demand for cash by depositors in  anticipation of
Year 2000 liquidity needs.

The  Bank's  securities  available  for sale  portfolio  was  $246.4  million at
December 31, 1999, a decrease of $34.4 million, or 12.3% from the $280.9 million
as of September 30, 1999. The decrease in securities was  principally due to the
continued growth in the loan portfolio, as well as the increase in cash reserves
noted above.

Total loans  receivable were $592.0 million as of December 31, 1999, an increase
of $25.1 million or 4.4% over the $566.9  million as of September 30, 1999.  The
following  table  shows  the loan  portfolio  composition  as of the  respective
balance sheet dates:

<TABLE>
<CAPTION>
                                                                     DECEMBER 31, 1999                  SEPTEMBER 30,
                                                                     1999                               1999
                                                                     -----------------                  --------------
                                                                                         % OF LOANS                      % OF LOANS
                                                                                         -----------                     -----------
                                                                                            (DOLLARS IN THOUSANDS)
<S>                                                                      <C>                    <C>       <C>                  <C>
Real estate loans:
     Residential mortgage                                                $223,438               37.7%     $221,721             39.1%
     Commercial                                                           229,249               38.7%      216,700             38.2%
     Construction                                                          20,348                3.4%       13,761              2.4%
                                                                         --------         ----------      --------       ----------
         Total real estate loans                                          473,035               79.0%      452,182             79.7%
                                                                         --------         ----------      --------       ----------
Commercial business loans                                                  73,240               12.4%       66,274             11.7%
                                                                         --------         ----------      --------       ----------
Consumer loans:
     Home equity lines of credit                                            6,599                1.1%        6,776              1.2%
     Other consumer                                                        39,490                6.7%       42,081              7.4%
                                                                         --------         ----------      --------       ----------
         Total consumer loans                                              46,089                7.8%       48,857              8.6%
                                                                         --------         ----------      --------       ----------
Gross loans                                                               592,364              100.0%      567,313            100.0%
                                                                                                          --------       ----------
Net deferred loan fees and costs and unearned discount                       (337)                            (407)
                                                                                                          --------
         Total loans                                                     $592,027                         $566,906
                                                                         --------                         --------
</TABLE>

Commercial  real  estate  loans  increased  $12.5  million to $229.2  million at
December 31, 1999 or 38.7% of total loans,  from $216.7 million at September 30,
1999, or 38.2% of total loans.  Commercial business loans increased $7.0 million
to $73.2  million or 12.4% of total loans at December  31,  1999,  up from $66.3
million  or 11.7% of total  loans at  September  30,  1999.  Construction  loans
increased  $6.6 million to $20.3  million or 3.4% of total loans at December 31,
1999, up from $13.8  million or 2.4% of total loans at September  30, 1999.  The
increase  in the  commercial  real  estate and  construction  loans,  as well as
commercial  business loans is consistent with the Company's strategy to increase
these loan portfolios as part of its emphasis on commercial banking  activities.
Residential  real estate loans  increased  $1.7 million,  or .8%, as the Company
elected  to hold 15 year  fixed  rate  residential  mortgages  in its  portfolio
instead of selling them in the secondary mortgage market.

                                       7
<PAGE>



Non-performing  assets were $9.7  million,  or 1.06% of assets at  December  31,
1999.  The table below sets forth the amounts and  categories  of the  Company's
non-performing assets.

<TABLE>
<CAPTION>
                                                  DECEMBER 31,             SEPTEMBER 30,
                                                      1999                    1999
                                               -------------------      ------------------
                                               (DOLLARS IN THOUSANDS)
<S>                                                     <C>                      <C>
Non-accrual loans:
     Real estate loans:
         Residential mortgage                           $ 2,324                  $ 2,707
         Commercial mortgage                              3,765                    4,210
         Construction                                        --                       --
                                                        -------                  -------
             Total real estate loans                      6,089                    6,917
Commercial business loans                                     3                       10
Home equity lines of credit                                  70                       58
Other consumer loans                                        126                      282
                                                        -------                  -------
             Total non-accrual loans                      6,288                    7,267
         Troubled debt restructurings                       605                      616
                                                        -------                  -------
             Total non-performing loans                   6,893                    7,883
     Other real estate owned :
         Residential real estate                            407                       76
         Commercial real estate                           2,376                    1,769
                                                        -------                  -------
             Total other real estate owned                2,783                    1,845
                                                        -------                  -------
             Total non-performing assets                $ 9,676                  $ 9,728
                                                        -------                  -------
Allowance for loan losses                               $11,072                  $10,764
                                                        -------                  -------
Allowance for loan losses as a percentage of
     non-performing loans                                160.63%                  136.55%
Non-performing loans as a percentage of
     total loans                                           1.16%                    1.39%
Non-performing assets as a percentage of
     total assets                                          1.06%                    1.06%
</TABLE>

The $1.0  million  decrease  in  non-performing  loans at  December  31, 1999 as
compared to September 30, 1999 was attributable  primarily to a foreclosure of a
commercial real estate loan which was transferred to other real estate owned and
subsequently  sold.  Other real estate owned increased by $938,000,  principally
from an  increase  of  $607,000  in  foreclosed  commercial  real  estate and an
increase of $331,000 of foreclosed  residential real estate. The following table
summarizes the activity in other real estate for the periods presented:

<TABLE>
<CAPTION>
                                            THREE MONTHS ENDED DECEMBER 31,
                                                    1999          1998
                                                    ----          ----
                                               (IN THOUSANDS)
<S>                                                 <C>          <C>
Balance at the beginning of the period              $1,845       $1,872
      Loans transferred to Other Real Estate         3,381           86
      Sale of Other Real Estate                     (2,430)         (97)
      Write down of Other Real Estate                  (13)         (17)
                                                    ------       ------
Balance at the end of the period                    $2,783       $1,844
                                                    ======       ======
</TABLE>

The allowance for loan losses was $11.1 million, or 1.87% of period end loans at
December 31, 1999, as compared to $10.8 million, or 1.90% of period end loans at
September  30,  1999.   The  allowance  for  loan  losses  as  a  percentage  of
non-performing loans was 160.63% at December 31, 1999, as compared to 136.55% as
of September 30, 1999. There are no loans past due 90 days and still accruing at
December  31,  1999 or  September  30,  1999.  Even  with the  decrease  in non-
performing  loans, the provision for loan losses remained similar to the quarter
ended  December  31,  1998  level  due to the  significant  growth  in the  loan
portfolio,  a change in the mix of the loan  portfolio to loan types with higher
risk  profiles,  as well as an increase in net loan  charge-offs.  The following
table summarizes the activity in the allowance for loan losses:

<TABLE>
<CAPTION>
                                            THREE MONTHS ENDED DECEMBER 31,
                                                  1999          1998
                                                  ----          ----
                                                       (IN THOUSANDS)
<S>                                             <C>           <C>
Allowance at the beginning of the period        $10,764       $ 8,260
      Charge-offs                                  (527)         (139)
      Recoveries                                     35            73
                                                -------       -------

      Net charge-offs                              (492)          (66)
Provision for loan losses                           800           813
                                                -------       -------

Allowance at  end of the period                 $11,072       $ 9,007
                                                -------       -------
</TABLE>



                                       8
<PAGE>




Total  deposits  were $557.3  million at December  31,  1999, a decrease of $6.1
million,  or 1.1% from the $563.4  million at September 30, 1999.  The following
table shows the deposit composition as of the respective balance sheet dates:

<TABLE>
<CAPTION>
                                            DECEMBER 31,1999                    SEPTEMBER 30, 1999
                                            ----------------                    ------------------
                                     (In Thousands)    % of Deposits     (In Thousands)    % of Deposits
<S>                                    <C>                 <C>              <C>                <C>
Savings accounts                       $188,006             33.7%           $191,968            34.1%
Time accounts                           220,876             39.6%            227,712            40.4%
Money Market accounts                    18,089              3.2%             20,348             3.6%
NOW & Super NOW accounts                 90,594             16.3%             86,305            15.3%
Demand accounts                          39,694              7.1%             37,040             6.6%
                                       --------            -----            --------           -----
                                       $557,259            100.0%           $563,373           100.0%
                                       --------            -----            --------           -----
</TABLE>

The $6.1  million  decrease in deposits  from  September  30, 1999 is  primarily
attributable  to a $6.8  million  decrease  in  time  deposits,  a $4.0  million
decrease  in  savings  deposits  and a $2.2  million  decrease  in money  market
accounts,  which was  partially  offset  by a $6.9  million  increase  in demand
deposits. The decline in time deposit accounts is due to lower rates paid as the
Company is emphasizing growth in core deposit accounts.

The  Company  increased  its  borrowings  with the FHLB,  to $159.4  million  at
December  31,  1999,  an increase of $14.2  million  from the $145.2  million at
September  30, 1999.  The Company used the  additional  borrowings to offset the
decrease in deposits and to repurchase shares of the Company's common stock.

 Shareholders'  equity at December  31, 1999 was $170.6  million,  a decrease of
$9.9 million or 5.5% from the $180.4 million at September 30, 1999. The decrease
was  principally  attributable to the repurchase of shares of common stock under
the  Company's  approved  repurchase  program,  of  which  446,165  shares  were
purchased for the Company's  Long-Term Equity  Compensation Plan.  Shareholders'
equity was increased by the Company's $1.9 million of net income,  offset by the
$607,000 of cash dividends  paid in the quarter and the $580,000  increase in in
accumulated other comprehensive loss.  Shareholders' equity was increased by the
ESOP shares which were  allocated as of December 31, 1999 and was also increased
by $241,000 due to the amortization of the restricted stock awards .

Shareholders'  equity as a percentage of total assets was 18.64% at December 31,
1999 compared to 19.72% at September 30, 1999.

TABLE #1 AVERAGE BALANCE, INTEREST, YIELD AND RATE

The following table presents, for the periods indicated, the total dollar amount
of interest  income  from  average  interest  earning  assets and the  resultant
yields, as well as the interest expense on average interest bearing liabilities,
expressed  both in  dollars  and rates.  Tax  equivalent  adjustments  reflected
principally  on municipal  securities  and  commercial  business  loans  totaled
$399,000 in the three month period ended December 31, 1999, and $247,000 for the
comparable three month period.  All average balances are daily average balances.
Non-accruing  loans have been  included  in the table as loans  receivable  with
interest earned recognized on a cash basis only.  Securities  available for sale
are shown at amortized cost



                                       9
<PAGE>



<TABLE>
<CAPTION>
                                                                   FOR THE THREE MONTHS ENDED DECEMBER 31,
                                                                   -----------------------------------------------------------------
                                                                   1999                              1998
                                                                   --------------------------------  -------------------------------
                                                                   Average   Interest     Yield/      Average  Interest    Yield/
                                                                   Balance   Earned        Rate       Balance  Earned       Rate
                                                                   --------------------------------  -------------------------------
                                                                   (Dollars in Thousands)
<S>                                                                 <C>          <C>      <C>         <C>         <C>          <C>
INTEREST EARNING ASSETS:
           Total Loans                                              575,745      11,257   7.82%       477,387     9,454        7.92%
           Loans held for sale                                        2,935          57   7.77%         7,766       164        8.45%
           Investment securities held to maturity                     2,511          50   7.96%         3,250        62        7.63%
           Securities available for sale
                  Taxable                                           119,867       1,870   6.24%       138,273     1,832        5.30%
                  Tax-exempt                                         69,875       1,038   5.94%        51,950       759        5.84%
                                                                    -------       -----               -------     -----
                     Total securities available for sale            189,742       2,908   6.13%       190,223     2,591        5.45%
                Federal funds sold and other short term investments  12,341         171   5.54%        10,363       143        5.52%
                                                                    -------       -----               -------     -----

                     Total earning assets                           783,274      14,443   7.38%       688,989    12,414        7.21%

INTEREST BEARING LIABILITIES:
      Deposits:
           NOW and Super NOW accounts                                85,681         477   2.23%        78,125       429        2.20%
           Money market deposit accounts                             19,268         146   3.03%        17,503       134        3.06%
           Savings accounts                                         188,228       1,343   2.85%       197,089     1,465        2.97%
           Time deposits accounts                                   223,858       2,677   4.78%       254,325     3,410        5.36%
           Escrow accounts                                            2,861          13   1.82%         2,266        11        1.94%
                                                                    -------       -----               -------     -----
                     Total interest-bearing deposits                519,896       4,656   3.58%       549,308     5,449        3.97%
      Borrowings:
             Securities sold under agreement to repurchase            3,200          25   3.13%         4,556        36        3.16%
             Short-term borrowings                                   40,747         577   5.66%           271         5        7.38%
             Long term-debt                                          44,412         651   5.86%        49,035       710        5.79%
                                                                    -------       -----               -------     -----
                     Total borrowings                                88,359       1,253   5.67%        53,862       751        5.58%
                                                                    -------       -----               -------     -----

                     Total interest-bearing liabilities             608,255       5,909   3.89%       603,170     6,200        4.11%

      Net interest spread                                                                 3.49%                                3.10%

      Net interest income / net interest margin                                   8,534   4.36%                   6,214        3.61%
                                                                                  -----                           -----

      Ratio of interest earning assets to
        interest bearing liabilities                                                    128.77%                              114.23%

      Tax equivalent adjustment                                                     399                             247
                                                                                -------                         -------


      Net interest income as per consolidated financial statements  $ 8,135                                     $ 5,967
                                                                    -------                                     -------
</TABLE>


                                       10

<PAGE>


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

GENERAL

For the three months ended December 31, 1999, the Company recorded net income of
$1.9 million,  an increase of $1.2 million as compared to net income of $703,000
for the three month period ended December 31, 1998. The increase was principally
the  result of higher net  interest  income and  noninterest  income,  which was
partially  offset by higher  non-interest  expenses and income tax expense.  The
Company's  basic and diluted  earnings per share were $0.18 for the three months
ended December 31, 1999.

Annualized return on average assets for the three months ended December 31, 1999
and 1998, was 0.89% and 0.39%, respectively, and the Company's annualized return
on average equity was 4.21% and 3.94%, respectively.

NET INTEREST INCOME

Net  interest  income  on a tax  equivalent  basis for the  three  months  ended
December 31, 1999, was $8.5 million, an increase of $2.3 million, or 37.3%, when
compared to the three months ended December 31, 1998. The increase was primarily
attributable  to a $94.3 million  increase in average  interest  earning  assets
which more than offset the $5.1  million  increase in average  interest  bearing
liabilities.  The increase in interest earning assets was principally  funded by
the net proceeds  received from the initial  public  offering.  The increase was
also a result of a $34.5  million  increase in average  borrowings,  offset by a
$29.4  million  decrease  in  average  deposits.  Net  interest  income was also
positively  affected by the 22 basis point decrease in average cost of funds and
the 17 basis point increase in yield on average earning assets.

Interest  and dividend  income for the three months ended  December 31, 1999 was
$14.4 million on a tax equivalent basis, an increase of $2.0 million,  or 16.3%,
over the prior year.  The  increase was  principally  due to the increase in the
volume of earning  assets as well as the 17 basis point  increase in the average
yield on interest earning assets.

The average yield on taxable available for sale securities increased by 94 basis
points for the three months ended December 31, 1999, compared to the same period
in 1998, which more than offset the $18.4 million decrease in average balance of
taxable  available for sale  securities.  The Company has invested  primarily in
short-term  government agency discount bonds providing  liquidity  comparable to
federal funds while still  offering a yield greater than the 5.54% average yield
for  federal  funds  sold.  The average  loan yield for the three  months  ended
December  31, 1999 was 7.82%,  down 10 basis  points from the same period in the
previous  year,  but was 169 basis points more than the 6.13%  average  yield on
available  for sale  securities.  The  Company has also  invested in  tax-exempt
municipal securities, primarily maturing within one year. The


                                       11

<PAGE>



average tax  equivalent  yield on these  securities  for the three  months ended
December 31, 1999 was 5.94%,  10 basis points higher than the yield for the same
period in 1998,  and 40 basis  points  higher than the average  yield on federal
funds sold and other short-term  investments for the three months ended December
31, 1999.

Interest expense for the three months ended December 31, 1999, was $5.9 million,
a decrease of $291,000,  or 4.7% over the three month period ended  December 31,
1998. The change was principally due to a 22 basis point decrease in the average
cost of funds which more than offset the increase in average  volume of interest
bearing  liabilities.  The average balance of interest  bearing  liabilities was
$608.3 million for the three months ended December 31, 1999, an increase of $5.1
million, or 1.0%,  primarily  attributable to an increase in borrowings of $34.5
million which offset a $29.4 million  decrease in deposits  primarily the result
of a $30.5 million decrease in time deposit accounts and a $8.9 million decrease
in  savings   accounts,   partially   offset  by  a  $7.6  million  increase  in
interest-bearing  checking.  The average  balance of FHLB  borrowings  was $85.2
million for the three  months  ended  December  31,  1999,  as compared to $49.3
million in the comparable  three month period.  The increase in short-term  FHLB
advances  more than offset the $30.5 million  decline in time deposit  accounts,
which the  Company  experienced  as a result of the  decrease  in time  deposits
rates.

The Company's net interest  margin was 4.36% for the three months ended December
31, 1999,  compared to 3.61% for the comparable three month period.  The primary
cause was a $94.3 million  increase in average earning assets,  due primarily to
the Company's  initial public offering as well as the 17 basis point increase in
the average yield on earning  assets and the 22 basis point  decrease in cost of
funds.  The decline in cost of funds was  principally  caused by the decrease in
rates paid on time deposits and savings  accounts which was partially  offset by
the increase in the average rates paid on FHLB  borrowings.  The increase in the
yield on interest  earning  assets was caused by the investment of a substantial
portion of the offering proceeds in loans,  primarily commercial real estate and
commercial  business loans,  with higher yields than securities or federal funds
and other short term investments.

For more information on average  balances,  interest,  yields and rates,  please
refer to Table #1, included in this report.

PROVISION FOR LOAN LOSSES

The Company  establishes  an allowance  for loan losses  through a provision for
loan losses charged to  operations.  The adequacy of the amount of the allowance
is determined by management's evaluation of various risk factors inherent in the
loan  portfolio.  This  analysis  takes into  consideration  such factors as the
historical  loan loss  experience,  changes in the nature and volume of the loan
portfolio,  overall  portfolio  quality,  review of specific  problem  loans and
current economic conditions that may affect borrowers' ability to pay.

The provision  for loan losses was $800,000 for the three months ended  December
31, 1999, a decrease of $13,000, or 1.6% from the comparable period of the prior
year. The allowance for


                                       12

<PAGE>




loan  losses was $11.1  million,  or 1.87% of period end loans at  December  31,
1999,  as compared to $10.8  million,  or 1.90% of period end loans at September
30, 1999. The allowance for loan losses as a percentage of non-performing  loans
was 160.63% at December 31, 1999 as compared to 136.55% at  September  30, 1999.
Non-performing  loans were $6.9 million, or 1.16% of total loans at December 31,
1999,  compared to $7.9 million,  or 1.39% of total loans at September 30, 1999.
Even with the decrease in  non-performing  loans,  the provision for loan losses
remained  similar  to the  quarter  ended  December  31,  1998  level due to the
significant  growth  in the  loan  portfolio,  a  change  in the mix of the loan
portfolio to loan types with higher risk profiles, as well as an increase in net
loan charge-offs.

Commercial  real estate loans and commercial  business loans  represent 51.1% of
the total loan portfolio at December 31, 1999 compared to 49.9% at September 30,
1999.

NON-INTEREST INCOME

Non-interest  income was $1.2 million for the three  months  ended  December 31,
1999, an increase of $528,000, or 84.8% from the three months ended December 31,
1998. The increase was  principally  due to the receipt of a $382,000 award from
the U.S.  Government  as a result of  originating  commercial  real estate loans
which qualified under the U.S. Treasury's Bank Enterprise Award program, as well
as increases  in trust  service  fees and service  charges on deposit  accounts.
Trust service fees were up $52,000, or 34.7%, as a result of a higher balance of
assets managed than in the comparable period of the prior year.  Service charges
on deposit  accounts were up $31,000,  or 13.5%,  compared to the same period of
the prior year.

NON-INTEREST EXPENSE

Non-interest  expense  for the three  months  ended  December  31, 1999 was $5.9
million,  an increase of $1.0 million,  or 21.6%,  from the same period in 1998.
Personnel  expense  increased by $356,000 during the three months ended December
31, 1999, as compared to the prior year due to the additional  costs in the 1999
period for the ESOP and the restricted stock awards. Professional fees increased
by $228,000,  or 126.0% for the three months ended  December 31, 1999,  over the
comparable  period  of the  prior  year,  primarily  caused  by  increased  fees
associated  with  operating  a stock form  organization  as compared to a mutual
savings bank. Other real estate owned expense was up $37,000,  or 56.1%, for the
three  months ended  December 31, 1999,  as compared to the same period in 1998.
The increase was  principally  due to higher  foreclosure  expenses in the three
months  ended  December  31,  1999,  as compared to the same period in the prior
year. Other expense increased by $318,000,  or 55.8%, for the three months ended
December 31, 1999, as compared to the three months ended December 31, 1998. This
increase was primarily  attributable to a $97,000 increase in operating expenses
for Delaware  franchise taxes as a result of being a stock form organization and
costs  associated  with the cash  reserves  maintained  for Year 2000  liquidity
purposes,  advertising  and  marketing  costs  related  to  the  opening  of the
Wynantskill  branch,  deferred  compensation  costs  for  directors,  and  costs
associated with servicing loans.

INCOME TAX EXPENSE

Income tax expense for the three months ended  December 31, 1999,  was $719,000,
as compared


                                       13

<PAGE>



to $233,000 for the comparable period in 1998. The increase was primarily caused
by the $1.7 million  increase in income  before taxes for the three months ended
December 31, 1999, as compared to the same period in the prior year.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity  is the  ability to  generate  cash flows to meet  present  and future
financial  obligations  and  commitments.   Management  monitors  its  liquidity
position on a daily basis to determine  that the Company has adequate  liquidity
to fund loan commitments,  meet daily withdrawal requirements of depositors, and
meet all other daily obligations of the Company.

The primary  sources of funds are deposits,  borrowings,  loan  repayments,  and
proceeds  from the  redemption  and  maturity  of  federal  funds sold and other
short-term  securities.  The  Company's  primary  cash  outflows  are  new  loan
originations,  purchases of securities,  deposit  withdrawals,  and common stock
repurchases.  The  Company  monitors  the cash  outflows  and inflows on a daily
basis. Although maturities and scheduled amortization of loans are a predictable
source of funds, deposit outflows,  mortgage prepayments and mortgage loan sales
are greatly influenced by changes in interest rates,  economic  conditions,  and
competitors.

The Company  attempts to provide stable and flexible  sources of funding through
the  management of its  liabilities,  including  core deposit  products  offered
through its branch network,  as well as FHLB advances.  Management believes that
the level of the Company's  liquid assets combined with daily monitoring of cash
inflows  and  outflows  provide  adequate  liquidity  to fund  outstanding  loan
commitments, meet daily withdrawal requirements of the Company's depositors, and
meet all other daily obligations of the Company.

Consistent  with  its  goals  to  operate  a  sound  and  profitable   financial
organization,  the  Company  actively  seeks to  maintain  a "well  capitalized"
institution in accordance with regulatory standards. As of December 31, 1999 and
September  30,  1999,  total  equity was  $170.6  million  and  $180.4  million,
respectively,  or 18.6% and 19.7% of total assets at those respective dates. The
reduction  in the  equity  to  assets  ratio is  consistent  with the  Company's
strategy  to manage its  capital  through  asset  growth,  dividend  payments as
reflected by the $.05 per share cash dividend paid in the quarter ended December
31, 1999, and a share repurchase  program.  The Company has repurchased  952,100
shares of common  stock in the quarter  ended  December  31,  1999.  The Company
utilized  446,165  of these  shares  for awards of  restricted  stock  under the
Company's  Long-Term Equity  Compensation Plan. In addition,  79,000 shares were
purchased by the Company  through a deferred  compensation  plan  maintained for
directors. The cost basis of these shares is included in treasury stock.

The  following  is a summary  of the  Company's  and the Bank's  actual  capital
amounts and ratios at December  31, 1999,  compared to the FDIC minimum  capital
requirements:

<TABLE>
<CAPTION>
                            ACTUAL                         RATIO REQUIREMENTS
                            ----------------------------   -----------------------------------
                                                           MINIMUM            CLASSIFICATION
                                                           CAPITAL            AS WELL
                            AMOUNT          PERCENT        ADAQUECY           CAPITALIZED
                            ------          -------        --------           -----------
                            (DOLLARS IN THOUSANDS)
<S>                         <C>              <C>             <C>                <C>
Leverage (Tier I) Capital:
     Bank                   $123,984         14.65%          4.00%              5.00%
     Consolidated           $170,965         20.20%          4.00%              5.00%

Tier 1 Risk-based capital:
     Bank                   $123,984         18.64%          4.00%              6.00%
     Consolidated           $170,965         26.19%          4.00%              6.00%

Total Risk-Based Capital:
     Bank                    132,299         19.89%          8.00%             10.00%
     Consolidated            179,126         27.44%          8.00%             10.00%

</TABLE>


                                       14
<PAGE>



FORWARD-LOOKING STATEMENTS

When used in this Form 10-Q or other filings by the Company with the  Securities
and Exchange  Commission,  in the  Company's  press  releases or other public or
shareholder  communications,  or in oral statements made with the approval of an
authorized  executive officer,  the words or phrases "will likely result",  "are
expected    to",    "will    continue",     "is    anticipated",     "estimate",
"project","believe",   or  similar   expressions   are   intended   to  identify
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation Reform Act of 1995. In addition,  certain disclosures and information
customarily provided by financial institutions, such as analysis of the adequacy
of the allowance for loan losses or an analysis of the interest rate sensitivity
of the Company's assets and  liabilities,  are inherently based upon predictions
of future events and circumstances.  Furthermore, from time to time, the Company
may publish  other  forward-  looking  statements  relating  to such  matters as
anticipated financial performance, business prospects, and similar matters.

The Private Securities  Litigation Reform Act of 1995 provides a safe harbor for
forward-looking  statements.  In order  to  comply  with  the  terms of the safe
harbor,  the Company  notes that a variety of factors  could cause the Company's
actual results and experience to differ materially from the anticipated  results
or other  expectations  expressed in the Company's  forward-looking  statements.
Some of the risks and uncertainties that may affect the operations, performance,
development and results of the Company's business, the interest rate sensitivity
of its  assets and  liabilities,  and the  adequacy  of its  allowance  for loan
losses, include but are not limited to the following:

o    Deterioration in local,  regional,  national or global economic  conditions
     which  could  result,   among  other   things,   in  an  increase  in  loan
     delinquencies,  a decrease in property  values,  or a change in the housing
     turnover rate;

o    the effect of certain customers and vendors of critical systems or services
     failing to adequately address issues relating becoming Year 2000 compliant;

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

o    changes in laws and regulations affecting the financial service industry;

o    changes in competition; and

o    changes in consumer preferences.

The  Company  wishes to  caution  readers  not to place  undue  reliance  on any
forward-looking statements,  which speak only as of the date made, and to advise
readers that various factors,  including those described above, could affect the
Company's financial performance and could


                                       15

<PAGE>



cause the Company's actual results or circumstances for future periods to differ
materially from those anticipated or projected.

The Company does not undertake,  and specifically  disclaims any obligation,  to
publicly release any revisions to any forward-looking  statements to reflect the
occurrence of anticipated or  unanticipated  events or  circumstances  after the
date of such statements.

ITEM 3:   Quantitative and Qualitative Disclosures About Market Risk

Interest rate risk is the most  significant  market risk  affecting the Company.
Other types of market risk,  such as foreign  exchange  rate risk and  commodity
price  risk,  do not  arise  in the  normal  course  of the  Company's  business
activities.

Interest rate risk can be defined as an exposure to a movement in interest rates
that could have an adverse effect on the Company's net interest income. Interest
rate risk arises naturally from the imbalance in repricing, maturity and/or cash
flow   characteristics   of  assets  and  liabilities.   When  interest  bearing
liabilities  mature or reprice on a different basis than interest earning assets
in a given  period,  a  significant  increase in market rates of interest  could
adversely  effect net interest income.  Similarly,  when interest earning assets
mature or reprice more quickly than interest bearing liabilities,  a significant
decline in market rates of interest could decrease net interest income.

In an attempt to manage its  exposure to changes in interest  rates,  management
monitors  the  Company's  interest  rate  risk.   Management's  asset  liability
management  committee  ('ALCO")  meets at least  monthly to review  consolidated
balance  sheet  structure,  formulate  strategy  in light of  expected  economic
conditions  and review  performance  against  guidelines  established to control
exposure to the various  types of inherent  risk,  and reports the interest rate
risk  position  to the  Board of  Directors  on a  quarterly  basis.  ALCO  also
evaluates  the overall  risk  profile  and  determines  actions to maintain  and
achieve a posture consistent with policy guidelines.  The Company cannot predict
the future movement of interest  rates,  and such movement could have an adverse
impact  on  the  Company's  consolidated  financial  condition  and  results  of
operations.

The  Company,  in order to manage  its  exposure  to  interest  rate  risk,  has
emphasized the origination of adjustable  rate mortgage  loans,  and to a lesser
extent  commercial real estate,  commercial  business and consumer loans;  sells
substantially all of its fixed rate residential  mortgage loans in the secondary
market,  although  recently  the  Company  is  holding  its  15-year  fixed rate
residential  mortgage  loans in  portfolio;  utilizes  FHLB  advances  to better
structure the maturities of its interest rate sensitive liabilities; and invests
in  short-term  securities  which  generally  bear  lower  yields,  compared  to
longer-term investments,  but which better position the Company for increases in
interest rates.

In order to reduce the  interest  rate risk  associated  with the  portfolio  of
conventional  mortgage  loans  held  for  sale,  as  well  as  outstanding  loan
commitments and uncommitted  loan  applications  with rate lock agreements which
are intended to be held for sale,  the Company  enters into  agreements  to sell
loans in the secondary  market to unrelated  investors on a loan-by-loan  basis,
and may also  enter  into  option  agreements.  There  have been no  significant
changes in the



                                       16

<PAGE>



Company's interest rate sensitivity since September 30, 1999.

PART II - OTHER INFORMATION

ITEM 1 -  LEGAL PROCEEDINGS

               Not applicable

ITEM 2 -  CHANGES IN SECURITIES AND USE OF PROCEEDS

               Not applicable

ITEM 3 -  DEFAULTS UPON SENIOR SECURITIES

               Not applicable

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

     The Company held a special  meeting of  shareholders on October 1, 1999. At
the  meeting a proposal  to approve  the Troy  Financial  Corporation  Long-term
Equity  Compensation  Plan was  approved.  The votes cast for and  against  this
proposal, and the number of abstentions and broker non-votes with respect to the
proposal, were as follows:

     Approval of 1999 Long-Term Equity Compensation Plan

<TABLE>
For               Against                Abstentions           Broker Non-votes
<S>               <C>                    <C>                             <C>
6,804,617         1,294,135              138,486                         ----
</TABLE>

ITEM 5 -  OTHER INFORMATION

               Not applicable

ITEM 6 -  EXHIBITS AND REPORTS ON FORM 8-K

               (a)  Exhibits.

                    27.  Financial Data Schedule

               (b)  Reports on 8-K.



                                       17

<PAGE>



     Even with the decrease in  non-performing  loans,  the  provision  for loan
losses remained  similar to the quarter ended December 31, 1998 level due to the
significant  growth  in the  loan  portfolio,  a  change  in the mix of the loan
portfolio to loan types with higher risk profiles, as well as an increase in net
loan charge-offs.

                                   SIGNATURES

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

                                      TROY FINANCIAL CORPORATION
                                              (Registrant)

Date:    February 14, 2000            /s/ Daniel J. Hogarty, Jr.
                                      ------------------------------------------
                                      Daniel J. Hogarty, Jr.
                                      Chairman of the Board, President and
                                        Chief Executive Officer

                                      /s/ Edward M. Maziejka, Jr.
                                      ------------------------------------------
                                      Edward M. Maziejka, Jr.
                                      Vice President and Chief Financial Officer








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