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: June 30, 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 AUGUST 10,
1999: 12,139,021 SHARES OF COMMON STOCK, PAR VALUE $.0001 PER SHARE.

<PAGE>

                                      INDEX


PART I - FINANCIAL INFORMATION


                                                                            PAGE
Item 1:    Financial Statements

                Consolidated Statements of Condition,
                 June 30, 1999 and September 30, 1999......................   1

                Consolidated Statements of Income, Three and Nine
                 Months Ended June 30, 1999 and June 30, 1998..............   2

                Consolidated Statements of Cash Flows, Nine Months
                 Ended June 30, 1999 and June 30, 1998.....................   3

                Consolidated Statements of Changes in Shareholder Equity,
                 Nine Months Ended June 30, 1999 and June 30, 1998.........   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>

                      CONSOLIDATED STATEMENTS OF CONDITION
                                    UNAUDITED

<TABLE>
<CAPTION>

                                                                              JUNE 30, 1999         SEPTEMBER 30, 1998
                                                                              -------------         ------------------
<S>                                                                           <C>                   <C>
               ASSETS                                                            (IN THOUSANDS, EXCEPT SHARE DATA)

Cash & due from banks                                                             $20,936                 $12,330
Federal funds sold                                                                  7,050                   5,585
                                                                                 --------                --------
       Total cash and cash equivalents                                             27,986                  17,915
Loans held for sale                                                                 4,242                  11,096
Securities available for sale at fair value                                       262,471                 197,758
Investment securities held to maturity, at amortized cost                           2,619                   3,483
Net loans receivable                                                              518,536                 457,321
Accrued interest receivable                                                         4,318                   4,287
Other real estate owned                                                             1,374                   1,872
Premises & equipment, net                                                          15,219                  14,096
Other assets                                                                       12,581                   8,821
                                                                                 --------                --------
       Total assets                                                              $849,346                $716,649
                                                                                 ========                ========

               LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
       Due to depositors:
          Savings accounts                                                        192,903                 198,509
          Money market accounts                                                    20,012                  15,708
          Demand accounts                                                         119,939                 107,311
          Time deposit accounts                                                   236,909                 256,674
                                                                                 --------                --------
               Total deposits                                                     569,763                 578,202
       Mortgagors' escrow accounts                                                  4,600                   1,900
       Securities sold under agreement to repurchase                                2,367                   2,524
       Federal Home Loan Bank advances                                             75,310                  44,940
       Accrued interest payable                                                       504                     360
       Official bank checks                                                         4,322                   8,841
       Contributions payable                                                        3,576                   3,453
       Other liabilities and accrued expenses                                       9,937                   5,400
                                                                                 --------                --------
               Total liabilities                                                  670,379                 645,620


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 June 30, 1999                                            1                      --
       Additional paid in capital                                                 117,759                      --
       Unallocated common stock held by ESOP                                       (9,620)                     --
       Retained earnings, substantially restricted                                 70,936                  70,622
       Accumulated other comprehensive income ( loss )                               (109)                    407
                                                                                 --------                --------
               Total shareholders' equity                                         178,967                  71,029
                                                                                 --------                --------
                         Total liabilities and shareholders' equity              $849,346                $716,649
                                                                                 ========                ========

</TABLE>

 See accompanying notes to unaudited consolidated interim financial statements.

<PAGE>

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>


                                                           FOR THE THREE MONTHS             FOR THE NINE MONTHS
                                                              ENDED JUNE 30,                   ENDED JUNE 30,
                                                           --------------------             -------------------
                                                                  (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                            1999             1998             1999             1998
                                                            ----             ----             ----             ----
<S>                                                        <C>               <C>             <C>               <C>
Interest & dividend income:
     Interest and fees on loans                           $10,063           $9,608           $29,225          $29,366
     Securities available for sale:
          Taxable                                           1,343              824             4,811            3,295
          Tax exempt                                          609              675             1,653            1,392
                                                          -------           ------           -------          -------
                                                            1,952            1,499             6,464            4,687
     Investment securities held to maturity                    54               74               172              228
     Federal funds sold                                     1,277              581             1,947            1,509
                                                          -------           ------           -------          -------
          Total interest and dividend income               13,346           11,762            37,808           35,790
                                                          -------           ------           -------          -------

Interest expense:
     Deposits and escrows                                   4,837            5,804            15,661           17,558
     Short-term borrowings                                     22                8                83               20
     Long-term borrowings                                     721               81             2,144              206
                                                          -------           ------           -------          -------
          Total interest expense                            5,580            5,893            17,888           17,784
                                                          -------           ------           -------          -------
          Net interest income                               7,766            5,869            19,920           18,006
     Provision for loan losses                                812            1,011             2,437            3,033
                                                          -------           ------           -------          -------
          Net interest income after provision for
          loan losses                                       6,954            4,858            17,483           14,973
                                                          -------           ------           -------          -------


Non-interest income:
     Loan servicing fees                                      166              102               398              305
     Service charges on deposit accounts                      224              209               666              622
     Net gains from securities sales                            5                0                14                1
     Net gains from mortgage loan sales                        48               26               233              125
     Trust income                                             176              108               481              319
     Other income                                             161              174               457              562
                                                          -------           ------           -------          -------
          Total non-interest income                           780              619             2,249            1,934
                                                          -------           ------           -------          -------


Non-interest expense:
     Compensation & employee benefits                       2,740            2,620             8,009            7,812
     Net occupancy                                            521              516             1,548            1,574
     Furniture, fixtures, & equipment                         174              196               552              651
     Computer charges                                         352              350             1,092            1,014
     Professional, legal, & other                             316              177               972              559
     Printing, postage, & telephone                           171              169               491              464
     Other real estate owned                                   63               24               748              412
     Contributions expense                                     20               34             4,389              114
     Other                                                    543              800             2,358            2,313
                                                          -------           ------           -------          -------
          Total non-interest expense                        4,900            4,886            20,159           14,913
                                                          -------           ------           -------          -------
Income (loss) before income tax expense ( benefit )         2,834              591              (427)           1,994
Income tax expense ( benefit )                                874              138              (741)             506
                                                          -------           ------           -------          -------
Net income                                                 $1,960             $453              $314           $1,488
                                                          =======           ======           =======          =======

     Earnings per share:
          Basic                                             $0.16              n/a             $0.16              n/a
          Diluted                                           $0.16              n/a             $0.16              n/a

</TABLE>


Earnings per share  calculations  do not include  earnings  prior to the initial
public offering on March 31, 1999.

 See accompanying notes to unaudited consolidated interim financial statements.

<PAGE>

                      Consolidated Statements of Cash Flows
                                   (unaudited)

<TABLE>
<CAPTION>


                                                                                       FOR THE NINE MONTHS ENDED
                                                                                   June 30, 1999       June 30, 1998
                                                                                   -------------       -------------
                                                                                             (IN THOUSANDS)
<S>                                                                               <C>                 <C>
Increase (decrease) in cash and cash equivalents:
    Cash flows from operating activities:

      Net income                                                                         314               1,488
      Adjustments to reconcile net income to net cash provided by (used in )
      operating activities:
         Depreciation                                                                    985               1,039
         Charitable foundation contribution                                            4,084                  --
         Net (accretion) amortization of discount/premium on securities               (2,366)                 63
         Deferred income tax expense                                                     845                 499
         Net gain on sale of securities available for sale                                (6)                  0
         Net gain on call of investment securities                                        (8)                  0
         Provision for loan losses                                                     2,437               3,033
         Net gain on sale of loans                                                      (233)               (125)
         Net loss/(gain) on sale of other real estate owned                               39                 (12)
         Net write down of other real estate owned                                       221                  17
         Proceeds from sale of loans held for sale                                    50,963              43,973
         Net loans made to customers and held for sale                               (45,721)            (46,811)
         Increase in accrued interest receivable                                         (31)                (48)
         Increase in other assets                                                     (3,795)               (940)
         Increase in accrued interest payable                                            144                  18
         Increase/(decrease) in official bank checks, contributions payable, and
           accrued expenses and other liabilities                                        142              (3,416)
                                                                                     -------             -------
           Total adjustments                                                           7,700              (2,710)
                                                                                     -------             -------
           Net cash provided by (used in) operating activities                         8,014              (1,222)
                                                                                     -------             -------

    Cash flows from investing activities:
         Proceeds from sale of securities available for sale                           8,611              10,883
         Proceeds from maturity and paydown of securities AFS                        464,222              84,014
         Purchases of securities available for sale                                 (536,032)            (99,631)
         Proceeds from maturity of investment securities                                 869                 371
         Proceeds from sale of other real estate owned                                   607                 550
         Net loans (made to)  repaid from customers                                  (62,642)             21,077
         Capital expenditures                                                         (2,108)             (1,652)
                                                                                     -------             -------
           Net cash (used in) provided by investing activities                      (126,473)             15,612
                                                                                     -------             -------

    Cash flows from financing activities:
         Net (decrease) increase in deposits                                          (8,439)              3,976
         (Decrease) increase in securities sold under agreements to
         repurchase                                                                     (157)                810
         Issuance of long term debt                                                   30,700              25,001
         Payments on long term debt                                                     (330)               (311)
         Increase in mortgagors' escrow accounts                                       2,700               2,984
         Net proceeds from stock offering                                            113,676                   0
         Acquisition of common stock by employee stock ownership plan                 (9,620)                 --
                                                                                     -------             -------
           Net cash provided by financing activities                                 128,530              32,460
                                                                                     -------             -------

Net increase in cash and cash equivalents                                             10,071              46,850

Cash and cash equivalents at beginning of period                                      17,915              42,451
                                                                                     -------             -------

Cash and cash equivalents at end of period                                            27,986              89,301
                                                                                     =======             =======

Supplemental information
    Cash paid for:
      Interest on deposits and borrowings                                             17,744              17,766
      Taxes paid                                                                         699               1,165

Supplemental schedule of noncash investing activities:
      Net reduction in loans resulting from the transfer  to other real
      estate owned                                                                       369                 646
      Increase (decrease) in equity from changes in net unrealized gain (loss) on
      securities available for sale, net of tax                                         (516)                 96

</TABLE>



<PAGE>

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                     ADDITIONAL  UNALLOCATED                ACCUMULATED
                                            COMMON    PAID IN    COMMON STOCK  RETAINED  OTHER COMPREHENSIVE COMPREHENSIVE   TOTAL
                                             STOCK    CAPITAL    HELD BY ESOP  EARNINGS    INCOME (LOSS)         INCOME     EQUITY
                                             -----    -------    ------------  --------    -------------         ------     ------
                                                                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                        <C>      <C>          <C>           <C>        <C>                 <C>           <C>
Balance at September 30, 1998                   $0         $0          $0      $70,622             $407             $0    $71,029

Common Stock
   Issuance of 11,730,575
     shares of $.0001 par value
     common stock in initial public offering     1
   Issuance of 408,446
     shares of $.0001 par value
     common stock to The Troy Savings Bank
     Community Foundation                                                                                                         1

Additional paid-in capital
   Issuance of 11,730,575
     shares of common stock in
     initial public offering, net
     of $3,628 offering costs                           113,675

   Issuance of 408,446
     shares of common stock
     to The Troy Savings Bank
     Community Fooundation                                4,084                                                             117,759

Unallocated common stock held by ESOP
   Acquisition of 971,121
     shares of common stock
     by ESOP                                                           (9,620)                                               (9,620)

Retained earnings
    Net income                                                                       314                               314      314


Accumulated other comprehensive
    income ( loss ):
    Unrealized net losses
       arising during the period on
       securities available for sale,
       pre-tax ($846)                                                                                  (508)
    Reclassification adjustments for gains
        realized in net income, pre-tax ($14)                                                            (8)
    Other comprehensive income (loss)                                                                  (516)          (516)    (516)
                                                                                                              ------------
Comprehensive income                                                                                                 $(202)
                                                                                                              ============


                                         ---------    ---------   -----------  ---------    ---------------   ------------  --------
       Balance at June 30, 1999                  1      117,759        (9,620)    70,936               (109)               $178,967
                                         =========    =========   ===========  =========    ===============                ========


Balance at September 30, 1997                   $0           $0            $0    $71,500                $42             $0 $ 71,542

Comprehensive income:
    Net Income:                                                                    1,488                             1,488    1,488
    Other comprehensive income,
      net of tax unrealized net
      gains arising during the
       period on AFS securities
       (pre-tax $160)                                                                                    96             96     96
                                                                                                                        --

       Comprehensive income                                                                                         $1,584
                                         ---------    ---------   -----------  ---------    ---------------      ========= --------

    Balance at June 30, 1998                    $0           $0            $0    $72,988               $138                 $73,126
                                         =========    =========   ===========  =========    ===============                ========
</TABLE>





<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,  1998  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 Registration Statement on
Form S-1,  filed with the  Securities  and Exchange  Commission  on December 11,
1998,  as amended.  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, 1999.  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.   The
weighted-average number of shares is the same for the basic and diluted earnings
per share  calculation for this reporting  period as the Company did not have an
approved  plan in place for stock  options or  unrestricted  stock.  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 and nine month periods
ended June 30, 1999:




          ( in thousands, except share and per share data )


                                       Three Months Ended     Nine Months Ended
                                           June 30,               June 30,
                                             1999                   1999
                                       ------------------     -----------------

Net income                                    $1,960               $1,960
                                       ------------------     -----------------

Weighted-average common shares            11,888,314           11,888,314
                                       ------------------     -----------------

Basic and diluted earnings per share           $0.16                $0.16
                                       ------------------     -----------------



Earnings per share  calculations  do not include  earnings  prior to the initial
public offering on March 31, 1999.



<PAGE>


Note 3. Comprehensive Income

On October 1, 1998, the Company adopted the provisions of Statement of Financial
Accounting  Standards  (SFAS) No. 130,  "Reporting  Comprehensive  Income." This
Statement  establishes  standards  for  reporting  and display of  comprehensive
income and its components. 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,  which  consists  of the net  change  in  unrealized  gains or losses on
securities  available for sale for the period.  Accumulated other  comprehensive
income represents the net unrealized gains or losses on securities available for
sale, net of tax, as of the balance sheet dates.  Comprehensive  income ( loss )
for the nine  months  ended  June 30,  1999  and  1998 was  ($202,000)  and $1.6
million, respectively.

Note 4. Impact of New Accounting Standards

In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting  Standards No. 131,  "Disclosure  about  Segments of an
Enterprise and Related  Information"  ("SFAS No. 131"). SFAS No. 131 establishes
standards for reporting by public  companies about  operating  segments of their
business.  SFAS No. 131 also establishes standards for related disclosures about
products and services,  geographic areas and major customers.  This statement is
effective for periods  beginning after December 15, 1997. This Statement imposes
disclosure  requirements  only and is not expected to have a material  effect on
the financial condition or results of operations of the Company.

In February 1998, the FASB issued SFAS No. 132,  "Employers'  Disclosures  about
Pensions  and  Other  Postretirement  Benefits,"  which  amends  the  disclosure
requirements of SFAS No. 87, "Employers' Accounting for Pensions",  SFAS No. 88,
"Employers'  Accounting for  Settlements  and  Curtailments  of Defined  Benefit
Pension  Plans and for  Termination  Benefits,"  and SFAS No.  106,  "Employers'
Accounting  for  Postretirement  Benefits  Other  Than  Pensions."  SFAS No. 132
standardizes  the  disclosure  requirements  of SFAS No.  87 and No.  106 to the
extent  practicable and recommends a parallel format for presenting  information
about pensions and

<PAGE>

other  postretirements  benefits.  The  statement  does  not  change  any of the
measurement  or recognition  provisions  provided for in SFAS No. 87, No. 88, or
No. 106. The Statement is effective for fiscal years  beginning  after  December
15, 1997.  Management  anticipates  providing  the required  disclosures  in the
Statements  in the annual  consolidated  financial  statements.  This  Statement
imposes  disclosure  requirements  only and is not  expected  to have a material
effect on the financial condition or results of operations of the Company.

In June  1998,  the  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.  This statement,  as
recently amended, is 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
971,121 shares of Common Stock in the open market. As of June 30, 1999, the ESOP
had purchased all 971,121 shares of Common Stock.  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

<PAGE>


consists of the six New York counties of Albany, Saratoga, Schenectady,  Warren,
Washington, and Rensselaer (Troy).

         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 mortgage  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 $849.3  million at June 30, 1999,  an
increase of $132.7  million,  or 18.5% from the $716.6  million at September 30,
1998. The $132.7 million  increase was  principally due to net proceeds from the
Company's  initial stock offering of $113.7 million and a $30.4 million increase
in borrowings  from the Federal Home Loan Bank of New York ( "FHLB"),  which was
partially offset by an $8.4 million decrease in deposits, primarily attributable
to authorized  withdrawals from deposit accounts to pay for subscription orders.
The funds were principally  invested in loans and securities available for sale,
primarily  commercial  real  estate,   commercial  business  loans,  and  U.  S.
Government agency discount bonds.

Cash and cash  equivalents  were $28.0  million at June 30, 1999, an increase of
$10.1  million from the $17.9  million at September  30, 1998.  The increase was
principally  due to the cash  proceeds  received  from the initial  public stock
offering.

Total  securities,  which  include  securities  held to maturity and  securities
available for sale,  were $265.1  million at June 30, 1999, an increase of $63.9
million, or 31.7% over the $201.2 million as of September 30, 1998. The increase
in  securities  was  principally  a $64.7  million  increase in AFS  securities,
primarily  due to the purchase of short-term  U.S.  Government  agency  discount
bonds.


<PAGE>

Total loans  receivable  were $528.8 million as of June 30, 1999, an increase of
$63.2  million or 13.6% over the $465.6  million as of September  30, 1998.  The
following  table  shows  the loan  portfolio  composition  as of the  respective
balance sheet dates:

<TABLE>
<CAPTION>


                                                               JUNE 30,                         SEPTEMBER 30,
                                                                1999                                 1998
                                                  --------------------------            ------------------------------
                                                                  % OF LOANS                                % OF LOANS
                                                                  ----------                                ----------
                                                                           (DOLLARS IN THOUSANDS)
<S>                                                  <C>                  <C>               <C>                <C>
Real estate loans:
     Residential mortgage                             $215,247             40.7%             $202,511            43.5%
     Commercial                                        194,157             36.7%              166,186            35.7%
     Construction                                        8,110              1.5%               10,052             2.2%
                                                      --------            -----              --------           -----
         Total real estate loans                       417,514             79.0%              378,749            81.4%
                                                      --------            -----              --------           -----
Commercial business loans                               66,251             12.5%               45,156             9.6%
                                                      --------            -----              --------           -----
Consumer loans:
     Home equtiy lines of credit                         6,720              1.3%                8,575             1.8%
     Other consumer                                     38,571              7.3%               33,445             7.2%
                                                      --------            -----              --------           -----
         Total consumer loans                           45,291              8.6%               42,020             9.0%
                                                                          -----                                 -----
Gross loans                                            529,056            100.0%              465,925           100.0%
                                                                          =====                                 =====
Net deferred loan fees and unearned discount              (270)                                 (344)
                                                      --------                              --------
         Total loans                                  $528,786                              $465,581
                                                      ========                              ========

</TABLE>



Residential  mortgage loans  increased  $12.7  million,  or 6.3%, as the Company
elected  to hold 15 year  fixed  rate  residential  mortgages  in its  portfolio
instead of selling them in the secondary  mortgage market.  Commercial  mortgage
loans increased  $27.9 million,  or 16.8%.  Commercial  business loans increased
$21.1 million, or 46.7%.


<PAGE>

Non-performing  assets at June 30,  1999 were  $9.8  million,  or 1.16% of total
assets,  compared to $13.5  million,  or 1.89% of total assets at September  30,
1998.  The table below sets forth the amounts and  categories  of the  Company's
non-performing assets.

<TABLE>
<CAPTION>


                                                                JUNE 30,                    SEPTEMBER 30,
                                                                  1999                         1998
                                                           --------------------        ---------------------
                                                                       (DOLLARS IN THOUSANDS)
<S>                                                                 <C>                          <C>
Non-accrual loans:
     Real estate loans:
         Residential mortgage                                       $2,472                       $2,900
         Commercial mortgage                                         4,857                        6,327
         Construction                                                   --                           --
                                                                   -------                      -------
             Total real estate loans.                                7,329                        9,227
Commercial business loans                                                6                           31
Home equity lines of credit                                            159                          259
Other consumer loans                                                    64                           50
                                                                   -------                      -------
             Total non-accrual loans                                 7,558                        9,567
         Troubled debt restructurings                                  891                        2,081
                                                                   -------                      -------
             Total non-performing loans                              8,449                       11,648
     Other real estate owned :
         Residential real estate                                        97                          345
         Commercial real estate                                      1,277                        1,527
                                                                   -------                      -------
             Total other real estate owned                           1,374                        1,872
                                                                   -------                      -------
             Total non-performing assets                            $9,823                      $13,520
                                                                   -------                      -------
Allowance for loan losses                                          $10,250                       $8,260
                                                                   =======                      =======
Allowance for loan losses as a percentage of
     non-performing loans                                           121.32%                       70.91%
Allowance for loan losses as a percentage of
     total loans                                                      1.94%                        1.77%
Non-performing loans as a percentage of total
     loans                                                            1.60%                        2.50%
Non-performing assets as a percentage of total
     assets                                                           1.16%                        1.89%

</TABLE>



The $3.2 million decrease in  non-performing  loans at June 30, 1999 as compared
to  September  30, 1998 was  attributable  primarily  to the  repayment of three
commercial mortgages. Other real estate owned decreased by $498,000, principally
from the  write-down  of two  properties  secured by  commercial  real estate as
determined by the  assessment of their fair market values.  The following  table
summarizes the activity in other real estate for the periods presented:


                                                   NINE MONTHS ENDED JUNE 30,
                                                      1999            1998
                                                      ----            ----
                                                         (IN THOUSANDS)

Balance at the beginning of the period             $1,872            $2,690
       Loans transferred to Other Real Estate         369               646
       Sale of Other Real Estate                     (646)             (538)
       Write down of Other Real Estate               (221)              (17)
                                                   ------            ------
Balance at the end of the period                   $1,374            $2,781
                                                   ======            ======


<PAGE>

The allowance for loan losses was $10.3 million, or 1.94% of period end loans at
June 30, 1999, and provided coverage of non-performing loans of 121.3%, compared
to coverage of 70.9% as of September  30,  1998.  There are no loans past due 90
days and still accruing at periods end June 30, 1999 and September 30, 1998. The
following  table  summarizes  the  activity in the  allowance  for loan  losses:

                                                    NINE MONTHS ENDED JUNE 30,
                                                       1999            1998
                                                       ----            ----
                                                           (IN THOUSANDS)

Allowance at the beginning of the period             $8,260          $6,429
       Charge-offs                                     (651)         (1,043)
       Recoveries                                       204             216
                                                    -------          ------
       Net charge-offs                                 (447)           (827)
Provision for loan losses                             2,437           3,033
                                                    -------          ------

Allowance at  end of the period                     $10,250          $8,635
                                                    =======          ======



Total deposits were $569.8 million at June 30, 1999, a decrease of $8.4 million,
or 1.5% from the $578.2 million at September 30, 1998. The following table shows
the deposit composition as of the respective balance sheet dates:

<TABLE>
<CAPTION>


                                                      JUNE 30, 1999                         SEPTEMBER 30, 1998
                                                      -------------                         ------------------
                                             (In Thousands)    % of Deposits        (In Thousands)    % of Deposits
<S>                                           <C>                 <C>               <C>                 <C>

Savings accounts                               $192,903            33.9%              $198,509            34.3%
Time accounts                                   236,909            41.6%               256,674            44.4%
Money Market accounts                            20,012             3.5%                15,708             2.7%
NOW & Super NOW accounts                         84,525            14.8%                76,195            13.2%
Demand accounts                                  35,414             6.2%                31,116             5.4%
                                               --------           -----               --------           -----
                                               $569,763           100.0%              $578,202           100.0%
                                               ========           =====               ========           =====

</TABLE>


The $8.4  million  decrease in deposits  from  September  30, 1998 is  primarily
attributable to approximately $26 million in authorized withdrawals from deposit
accounts to pay for stock  subscription  orders,  which was partially  offset by
deposit growth.

The Company increased its borrowings with the FHLB, to $75.3 million at June 30,
1999, an increase of $30.4 million from the $44.9 million at September 30, 1998.
The increased  borrowings  were used to fund the growth in loans and  securities
noted above.

Shareholders'  equity at June 30, 1999 was $179.0 million, an increase of $108.0
million or 152.0% from the $71.0 million at September 30, 1998. The increase was
principally  attributable  to the sale of 11,730,575  shares of common stock for
$10.00 per share, net of $3.6 million in conversion  costs, and the contribution
of 408,446 shares to The Troy Savings Bank Community  Foundation.  Shareholders'
equity was  increased by the Company's  year-to-date  net income of $314,000 and
decreased by the $516,000  decline in accumulated  other  comprehensive  income.
Shareholders'  equity was decreased by the purchase of 971,121  shares of Common
Stock in the open  market by the Bank's ESOP which was funded by a loan from the
Company.

<PAGE>

Shareholders'  equity as a percentage of total assets was 21.1% at June 30, 1999
compared to 9.9% at September 30, 1998.

                                   TABLE No.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  totaled $329,000 in the three month period
ended June 30, 1999,  and $323,000 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  include  both the  securities  available  for sale
portfolio and the held to maturity portfolio.  Securities available for sale are
shown at amortized cost.







<PAGE>

<TABLE>
<CAPTION>


                                                                                    FOR THE THREE MONTHS ENDED JUNE 30,
                                                                -------------------------------------------------------------------
                                                                               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:
     Loans:
          Residential mortgage                                    $209,675     $3,879      7.40%      $200,481      $3,902     7.78%
          Commercial mortgage                                      179,464      3,745      8.35%       159,284       3,502     8.79%
          Construction                                               7,958        122      6.15%        20,934         330     6.30%
                                                                  --------     ------                 --------     -------
                     Total real estate loans                       397,097      7,746      7.80%       380,699       7,734     8.13%
          Commercial business                                       76,567      1,472      7.69%        51,391       1,099     8.55%
          Consumer loans:
                 Home Equity                                         6,882        134      7.76%         8,914         191     8.58%
                 Other                                              30,176        679      9.00%        17,853         372     8.34%
                                                                  --------     ------                 --------     -------
                     Total consumer loans                           37,058        813      8.77%        26,767         563     8.42%
                                                                  --------     ------                 --------     -------
                     Total Loans                                   510,722     10,031      7.86%       458,857       9,396     8.19%
          Loans held for sale                                        4,212         71      6.75%        12,676         212     6.70%
          Securities held for investment                             2,675         54      8.03%         3,705          74     8.02%
          Securities available for sale (at amortized cost)
                 Taxable                                           100,389      1,343      5.35%        55,292         824     5.96%
                 Tax-exempt                                         62,306        899      5.77%        67,503         998     5.91%
                                                                  --------     ------                 --------     -------
                     Total securities available for sale (at       162,695      2,242      5.51%       122,795       1,822     5.93%
                     amortized cost)
               Federal funds sold and other short term
               investments                                         106,718      1,277      4.79%        41,882         581     5.55%
                                                                  --------     ------                 --------     -------
                     Total earning assets                          787,022     13,675      6.95%       639,915      12,085     7.55%

INTEREST BEARING LIABILITIES:
     Deposits:
          NOW and Super NOW accounts                                80,748        438      2.17%        76,780         423     2.21%
          Money market deposit accounts                             18,571        136      2.94%        14,511         111     3.06%
          Savings accounts                                         192,109      1,309      2.72%       195,113       1,607     3.30%
          Time deposits accounts                                   239,353      2,893      4.83%       262,649       3,646     5.55%
          Conversion funds in escrow                                 6,130         43      2.79%            --          --       --
          Escrow accounts                                            3,693         18      1.96%         4,155          17     1.65%
                                                                  --------     ------                 --------     -------
                     Total interest-bearing deposits               540,604      4,837      3.58%       553,208       5,804     4.20%
     Borrowings:
            Securities sold under agreement to repurchase            2,780         22      3.12%         1,119           8     2.96%
            Short-term borrowings                                    5,785         72      4.98%             0           0     0.00%
            Long term-debt                                          44,863        649      5.79%         5,478          81     5.90%
                                                                  --------     ------                 --------     -------
                     Total borrowings                               53,428        743      5.56%         6,597          89     5.41%
                                                                  --------     ------                 --------     -------

                     Total interest-bearing liabilities            594,032      5,580      3.76%       559,805       5,893     4.21%

     Net interest spread                                                                   3.19%                               3.34%

     Net interest income / net interest margin                                  8,095      4.11%                     6,192     3.87%
                                                                               ======                              =======

     Ratio of interest earning assets to
       interest bearing liabilities                                                      132.49%                             114.31%

     Tax equivalent adjustment                                                    329                                 323
                                                                               ======                              =======

     Net interest income as per consolidated financial statements              $7,766                              $5,869
                                                                               ======                              =======

</TABLE>


<PAGE>

COMPARISON   OF   OPERATING   RESULTS  FOR  THE  THREE  MONTHS  ENDED  JUNE  30,
1999 AND 1998

GENERAL

For the three  months ended June 30,  1999,  the Company  recorded net income of
$2.0 million,  an increase of $1.5 million as compared to net income of $453,000
for the three month period ended June 30, 1998. The increase was principally the
result of higher net interest  income,  lower  provision  for loan  losses,  and
higher  noninterest  income,  which was  partially  offset by higher  income tax
expense.  The Company earned $0.16 per share for the three months ended June 30,
1999 and its annualized  return on average assets was 0.95% as compared to 0.27%
for the three months ended June 30, 1998.  The  Company's  annualized  return on
average equity was 4.32% for the three months ended June 30, 1999.

NET INTEREST INCOME

Net interest  income on a tax  equivalent  basis for the three months ended June
30, 1999, was $8.1 million, an increase of $1.9 million, or 30.7%, when compared
to the three months ended June 30, 1998. The increase was primarily attributable
to a $147.1 million  increase in average interest earning assets which more than
offset the 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 $46.8 million
increase in average  borrowings,  which more than offset a $5.5 million decrease
in average deposits.  Net interest income was also positively affected by the 45
basis  point  decrease  in average  cost of funds,  which  partially  offset the
decrease in yield on average  earning  assets.  The Company has utilized  longer
term borrowings with the FHLB to provide some stability in its funding costs and
to match some of its longer term commercial real estate mortgages.

Interest  income for the three months ended June 30, 1999 was $13.7 million on a
tax equivalent basis, an increase of $1.6 million, or 13.2%, over the comparable
period last year.  The  increase in the volume of earning  assets  substantially
offset the 60 basis  point  decrease in the  average  yield on interest  earning
assets.

The average balance of taxable available for sale securities  increased by $45.1
million for the three months ended June 30, 1999, compared to the same period in
1998,  which  offset the 61 basis  points  decrease in average  yield.  The Bank
anticipates  that its current loan  commitments will require the availability of
short-term  funds.  Therefore,   the  funds  have  been  invested  primarily  in
short-term  government agency discount bonds providing  liquidity  comparable to
federal funds while still  offering a yield greater than the 4.79% average yield
for federal  funds sold.  The average loan yield for the three months ended June
30, 1999 was 7.86%,  down 33 basis  points from the same period in the  previous
year,  but was 235 basis points more than the 5.51%  average  yield on available
for sale  securities.  The Company has also  invested  in  tax-exempt  municipal
securities, primarily maturing within one year. The average tax equivalent yield
on these  securities is 5.77%,  similar to the yield in 1998 and 98 basis points
higher than the average  yield on federal  funds for the three months ended June
30, 1999.


<PAGE>

Interest  expense for the three months ended June 30, 1999, was $5.6 million,  a
decrease of  $313,000,  or 5.3% over the three month period ended June 30, 1999.
The change was  principally due to a 45 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
$594.0  million for the three months  ended June 30, 1999,  an increase of $34.2
million, or 6.1%,  primarily  attributable to an increase in borrowings of $46.8
million which offset a $5.5 million decrease in deposits primarily the result of
approximately $26 million in authorized withdrawals from deposit accounts to pay
for stock  subscription  orders,  net of deposit growth.  The average balance of
FHLB  borrowings  was $50.6 million for the three months ended June 30, 1999, as
compared to $5.5 million in the comparable  three month period.  The increase in
long-term  FHLB  advances  offset  the $23.3  million  decline  in time  deposit
accounts,  which the  Company  experienced  as a result of the  decrease in time
deposits rates. The time deposit rates were comparable to those offered by other
financial institutions operating in the Company's primary market area.

The Company's net interest  margin was 4.11% for the three months ended June 30,
1999, compared to 3.87% for the comparable three month period. The primary cause
was a $147.1 million  increase in average earning  assets,  due primarily to the
Company's  initial public  offering,  which offset the 60 basis point decline in
average yield on earning assets and the 45 basis point decrease in cost of funds
which more than offset the increase in average interest bearing liabilities. The
decline in cost of funds was principally caused by the decrease in rates paid on
savings accounts and time deposits which was partially offset by the increase in
the average rates paid on FHLB borrowings. The decrease in the yield on interest
earning  assets was caused by the  investment  of a  substantial  portion of the
offering proceeds in short-term  government agency bonds and federal funds, with
lower yields than long-term securities, but which provide the liquidity required
to fund higher yielding loan growth.

For more information on average balances, interest, yield and rate, please refer
to Table No. 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 $812,000 for the three months ended June 30,
1999, a decrease of $199,000,  or 19.7% from the comparable  period of the prior
year. The decrease in the provision was primarily attributable to a reduction in
non-performing loans of $3.2 million from $11.6 million at September 30, 1998 to
$8.4 million at June 30, 1999. The allowance for loan losses  provides  coverage
of 121.3% of  non-performing  loans at June 30, 1999, as compared to 70.9% as of
September 30, 1998. However, offsetting the decrease in non-performing loans was
an increase of $141,000,  or 100.0% in net charge-offs to $282,000 for the three
months ended


<PAGE>

June 30, 1999 compared to the same period of the prior year.

Although the provision for loan losses has reduced from the same period in 1998,
the Company anticipates its provision for loan losses to remain at approximately
its current levels through fiscal year end 1999 as the mix of the Company's loan
portfolio  includes an  increasing  percentage of higher credit risk loan types,
such as commercial real estate loans and commercial  business loans.  Commercial
real estate loans and  commercial  business loans  represent  49.2% of the total
loan portfolio at June 30, 1999 compared to 45.3% at September 30, 1998.

NON-INTEREST INCOME

Non-interest  income was $780,000  for the three months ended June 30, 1999,  an
increase of $161,000,  or 26.0% from the three  months ended June 30, 1998.  The
increase was principally from increases in net gains on sales of mortgage loans,
trust commissions, loan servicing fees, and service charges on deposits. The net
gains from sales of  mortgage  loans was up $22,000,  or 84.6%, during the three
months  ended June 30,  1999,  as  compared  to the same  period in 1998.  Trust
commissions were up $68,000, or 63.0%, as a result of a higher balance of assets
managed than in the  comparable  period of the prior year.  Loan  servicing fees
were up $64,000,  or 62.7% as a result of a higher balance of loans serviced for
the quarter  ended June 30, 1999, as compared to the three months ended June 30,
1998. Service charges on deposit accounts were up $15,000,  or 7.2%, compared to
the same period of the prior year.

NON-INTEREST EXPENSE

Non-interest  expense for the three months ended June 30, 1999 was $4.9 million,
an increase of $14,000, or 0.3%, over the comparable period last year. Personnel
expense  increased by $120,000  during the three months ended June 30, 1999,  as
compared to the prior year, as the Company began to record expenses for its ESOP
and supplemental retirement plan for certain executive officers. The increase in
expense  was  partially  offset  by a  reduction  in  staffing  levels  over the
comparable period last year.  Professional fees increased by $139,000,  or 78.5%
for the three  months  ended June 30, 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 $39,000,  or 162.5%, for the three months ended June 30, 1999, as
compared to the same  period in 1998.  The  increase in expense was  principally
caused by the sale of two residential  real estate  properties at a loss.  Other
expense  decreased by $257,000,  or 32.13%,  for the three months ended June 30,
1999,  as compared to the three months ended June 30,  1998.  This  decrease was
primarily  attributable to a $235,000  operating  expense incurred by one of the
Bank's  subsidiaries  in the three months ended June 30, 1998.  No such expenses
were recorded in the three months ended June 30, 1999.

INCOME TAX EXPENSE

Income tax expense for the three months ended June 30, 1999,  was  $874,000,  as
compared  to  $138,000  for the  comparable  period in 1998.  The  increase  was
primarily  caused by the $2.2  million  increase in income  before taxes for the
three months  ended June 30,  1999,  as compared to the same period in the prior
year.

<PAGE>

                                   TABLE No.2
                    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  totaled  $868,000 in the nine month period
ended June 30, 1999,  and $732,000 for the  comparable  nine 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  include  both the  securities  available  for sale
portfolio and the held to maturity portfolio.  Securities available for sale are
shown at amortized cost.

<PAGE>

<TABLE>
<CAPTION>


                                                                    FOR THE NINE MONTHS ENDED JUNE 30,
                                                         --------------------------------------------------------------------------
                                                                           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:
    Loans:
       Residential mortgage                                $207,936     $11,480      7.36%         $205,677     $12,081     7.83%
       Commercial mortgage                                  176,574      10,481      7.91%          168,309      11,004     8.72%
       Construction                                           6,648         415      8.33%           18,329         916     6.67%
                                                           --------     -------                    --------     -------
                Total real estate loans                     391,158      22,376      7.63%          392,315      24,001     8.16%
       Commercial business                                   62,783       4,115      8.74%           50,031       3,252     8.67%
       Consumer loans:
              Home Equity                                     7,581         448      7.89%            9,338         604     8.63%
              Other                                          31,065       2,024      8.69%           19,094       1,165     8.13%
                                                           --------     -------                    --------     -------
                Total consumer loans                         38,646       2,472      8.53%           28,432       1,769     8.30%
                                                           --------     -------                    --------     -------
                Total Loans                                 492,587      28,963      7.84%          470,778      29,022     8.22%
       Loans held for sale                                    5,914         341      7.68%            6,750         344     6.80%
       Securities held for investment                         2,909         172      7.87%            3,813         228     7.99%
       Securities available for sale (at amortized cost)
              Taxable                                       121,543       4,811      5.28%           73,670       3,295     5.96%
              Tax-exempt                                     56,248       2,442      5.79%           47,006       2,124     6.03%
                                                           --------     -------                    --------     -------
                Total securities available for sale (at     177,791       7,253      5.44%          120,676       5,419     5.99%
                   amortized cost)
              Federal funds sold and other short term
                investments                                  53,315       1,947      4.87%           36,130       1,509     5.57%
                                                           --------     -------                    --------     -------

                 Total earning assets                       732,516      38,676      7.04%          638,147      36,522     7.63%

INTEREST BEARING LIABILITIES:
    Deposits:
       NOW and Super NOW accounts                            79,684       1,308      2.19%           76,943       1,268     2.20%
       Money market deposit accounts                         18,141         407      2.99%           13,566         312     3.07%
       Savings accounts                                     196,847       4,215      2.85%          194,578       4,808     3.29%
       Time deposits accounts                               248,010       9,440      5.07%          266,673      11,135     5.57%
       Conversion funds in escrow                            12,090         253      2.79%                0           0     0.00%
        Escrow accounts                                       2,883          38      1.76%            3,309          35     1.42%
                                                           --------     -------                    --------     -------
                Total interest-bearing deposits             557,655      15,661      3.74%          555,069      17,558     4.22%
    Borrowings:
         Securities sold under agreement to repurchase        3,518          83      3.14%              978          20     2.76%
         Short-term borrowings                               10,785         200      4.86%                0           0     0.00%
         Long term-debt                                      39,421       1,944      5.82%            4,660         206     5.89%
                                                           --------     -------                    --------     -------
                Total borrowings                             53,724       2,227      5.54%            5,638         226     5.34%
                                                           --------     -------                    --------     -------
                  Total interest-bearing liabilities        611,379      17,888      3.90%          560,707      17,784     4.23%

    Net interest spread                                                              3.14%                                  3.40%

    Net interest income / net interest margin                            20,788      3.78%                       18,738     3.92%
                                                                        =======                                 =======

    Ratio of interest earning assets to
      interest bearing liabilities                                                 119.81%                                113.81%

    Tax equivalent adjustment                                               868                                     732
                                                                        -------                                 -------

    Net interest income as per consolidated financial statements        $19,920                                 $18,006
                                                                        =======                                 =======

</TABLE>


<PAGE>

COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998

GENERAL

For the nine months  ended June 30,  1999,  the Company  recorded  net income of
$314,000  as compared  to net income of $1.5  million for the nine months  ended
June 30, 1998.  The net decrease  was  primarily  the result of the $2.5 million
after tax  nonrecurring  charge for the contribution of stock to the Foundation.
The Company's annualized return on average assets for the nine months ended June
30, 1999 was 0.05%,  as  compared  to 0.30% for the nine  months  ended June 30,
1998.  The  annualized  return on average  equity was 0.38% for the nine  months
ended June 30,  1999,  as compared  to 2.74% for the nine months  ended June 30,
1998.

NET INTEREST INCOME

Net interest income on a tax equivalent basis for the nine months ended June 30,
1999, was $20.8 million, an increase of $2.1 million, or 10.9%, when compared to
the nine months ended June 30, 1998. The increase was  principally the result of
a $94.4 million increase in average  interest  earning assets,  which was funded
primarily  by the net  proceeds  received  from  the  Company's  initial  public
offering, as well as an increase in average borrowings.

Interest  income on a tax  equivalent  basis for the nine months  ended June 30,
1999,  was  $38.7  million,  an  increase  of $2.2  million,  or 5.9%,  over the
comparable nine month period in 1998. The increase was primarily attributable to
the $94.4 million increase in average  interest earning assets,  which more than
offset the 59 basis point decline in average yield on interest earning assets.

The  increase in interest  earning  assets was  primarily  the result of a $12.8
million increase in average commercial  business loans, a $10.2 million increase
in average consumer loans as a result of a direct-mail marketing campaign, and a
$60.2 million increase in average  securities  available for sale,  primarily in
short-term government agency discount bonds and tax-exempt municipals,  maturing
in one year or less. The average yield on available for sale securities was down
55 basis points over the comparable  period in 1998,  however it was higher than
the 4.87% average yield on federal funds sold while still offering the liquidity
to fund higher yielding loans.

The Company  increased its average  investment in available for sale  tax-exempt
municipal  securities by $9.2 million over the  comparable  period in 1998.  The
average tax equivalent yield on tax-exempt  municipal securities was 5.79%, down
from 6.03% over the nine month  period  ended June 30, 1998 and 92 basis  points
higher than the 4.87% average yield on federal funds sold.

Interest  expense for the nine months ended June 30, 1999 was $17.9 million,  an
increase of $104,000,  or .58%. The increase was principally  related to a $50.7
million  increase in average interest  bearing  liabilities,  up from the $560.7
million for the  comparable  period in 1998.  The average  rate paid on interest
bearing  liabilities was 3.90%, down 33 basis points from the 4.23% average rate
paid in 1998.  The decrease in cost of funds was primarily  attributable  to the

<PAGE>

decreases  for savings  accounts  and time  accounts of 44 and 50 basis  points,
respectively.

The Company's average  borrowings were up $48.1 million from the $5.6 million in
average  borrowings  for the nine months  ended June 30,  1998.  The increase is
principally  the result of additional  borrowings  with the FHLB, of which $30.0
million  were long term fixed rate  advances,  $11.0  million  were  convertible
advances, and $5.7 million were short term fixed rate borrowings. The borrowings
were used primarily to fund the growth in interest earning assets.
There were no new advances in the comparable nine month period.

The Company's  net interest  margin was 3.78% for the nine months ended June 30,
1999,  down 14 basis points  compared to 3.92% for the comparable  period of the
prior year. The decrease was  principally the result of a 59 basis point decline
in the average yield on interest earning assets.  This was primarily caused by a
38 basis point decline in the average yield on loans as  competition  for market
share remained  strong,  interest  rates were at historical  lows, and borrowers
refinanced into longer term fixed-rate  loans. The Company also experienced a 55
basis  point  decline in the average  yield on  available  for sale  securities,
principally  the result of an increase in available for sale  government  agency
securities,  with short term  maturities  and lower yields than other  long-term
investment securities. The Company expects to use the proceeds of these maturing
securities to fund its loan originations.

For more information on average balances, interest, yield and rate, please refer
to Table No.2 included in this quarterly report.

PROVISION FOR LOAN LOSSES

The  provision  for loan losses was $2.4  million for the nine months ended June
30,  1999 , a decrease  of  $596,000,  or 19.7% from the  comparable  nine month
period.  The decrease in provision was primarily  attributable to a reduction in
non-performing  loans of $3.2 million,  from $11.6 million at September 30, 1998
to $8.4  million  at June 30,  1999.  The  allowance  for loan  losses  provides
coverage  of 121.3% of  non-performing  loans at June 30,  1999,  as compared to
70.9% as of September 30, 1998.  Offsetting the decrease in non-performing loans
was an increase of $380,000,  or 45.9%,  in net  charge-offs to $447,000 for the
nine months ended June 30, 1999 compared to the same period in 1998.

In  addition,  as noted  above the credit  risk  profile of the  Company's  loan
portfolio  continues  to change as an  increasing  percentage  of the total loan
portfolio is comprised of higher credit risk loan types, such as commercial real
estate and commercial business loans.

NON-INTEREST INCOME

Non-interest income was $2.2 million for the nine months ended June 30, 1999, an
increase  of  $315,000,  or 16.3% from the  comparable  nine month  period.  The
increase was principally  due to a $108,000  increase in net gains from mortgage
loan sales, a related  $93,000  increase in loan servicing  fees, and a $162,000
increase in trust  income.  Offsetting  the increase was a $105,000  decrease in
other income,  which consisted  primarily of $25,600 in Nationar  recoveries and
$50,000  related to a settlement  of a  commercial  real estate loan in the nine
month period ended

<PAGE>

June 30, 1998. No such income was  recognized in 1999. The increase in net gains
on  mortgage  loan sales is a result of the sale of $51.0  million in fixed rate
residential  loans in the  secondary  mortgage  market for the nine months ended
June 30, 1999, up from $44.0 million for the comparable nine month period.

NON-INTEREST EXPENSE

Non-interest expense for the nine months ended June 30, 1999, was $20.2 million,
an increase of $5.2 million,  or 35.2%,  over the comparable  nine month period.
The increase was primarily  attributable to compensation  and employee  benefits
expense,  the  cost of the  stock  contribution  to the  Foundation,  Year  2000
remediation expenses, and other real estate owned expense.

Compensation  and employee  benefits  expense  increased  by  $197,000,  to $8.0
million for the nine months ended June 30, 1999. The increase was primarily from
recording  expenses  for its ESOP and the  supplemental  retirement  plan  which
benefits certain executive officers.

Contribution  expenses  increased to $4.4 million for the nine months ended June
30, 1999 compared to $114,000 for the comparable nine month period. The increase
was  principally  the  $4.1  million  cost  of  the  stock  contribution  to the
Foundation.

Other expense increased to $2.4 million for the nine months ended June 30, 1999,
from the $2.3 million for the  comparable  nine month  period.  The increase was
principally  the result of $382,000  for Year 2000  remediation  expenses  which
occurred in the three months ended March 31,  1999.  The increase was  partially
offset by a $235,000 reduction in expense by one of the Bank's  subsidiaries for
operating costs incurred in the nine months ended June 30, 1998 and not incurred
in the nine months ended June 30, 1999.

Other real estate owned expenses increased  $336,000,  primarily the result of a
write-down in the three months ended March 31, 1999 of two properties secured by
commercial  real estate as determined by  management's  assessment of their fair
market values.

INCOME TAX EXPENSE

Income tax  benefit  for the nine  months  ended June 30,  1999,  was  $741,000,
compared to income tax expense of $506,000 from the comparable nine month period
in 1998.  The difference is  principally  the result of the tax benefit  derived
from the stock contribution to the Foundation,  and the Company's  investment in
tax-exempt obligations.

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

<PAGE>

of depositors, and meet all other daily obligations of the Company.

The primary sources of funds are loan  repayments,  borrowings and proceeds from
the  redemption  and  maturity  of  federal  funds  sold  and  other  short-term
securities.

Net cash provided by operating  activities  was $8.0 million for the nine months
ended June 30,  1999,  resulting  primarily  from $5.2  million in net  proceeds
received from loan sales in excess of loans originated for sale and the increase
in other  assets as a result of the $1.6 million  deferred tax asset  related to
the stock contribution to the Foundation.

Investing  activities used $126.5 million in the nine months ended June 30, 1999
as the Company  increased its interest  earning  assets  through the purchase of
$63.2 million, net of proceeds on redemptions, maturities and sales of available
for sale securities and $62.6 million in loan originations. Financing activities
provided  $128.5  million,  as the Company  experienced  increases  in deposits,
short-term borrowings, and the cash proceeds received from the Company's initial
public  offering.  For more details  concerning  the Company's  cash flows,  see
"Unaudited Interim Consolidated Statements of Cash Flows."

An important  source of the  Company's  funds is the Bank's core  deposits.  The
Bank's  core  deposits  are defined as demand  deposit  accounts,  money  market
accounts, and savings accounts,  which totaled $332.9 million, or 58.4% of total
deposits  at June 30,  1999.  The Company  had $99.5  million in  deposits  with
balances in excess of $100,000 at June 30, 1999.

The  Company  believes  that it will have  sufficient  funds to meet its current
commitments. At June 30, 1999, the Company had commitments to originate loans of
$52.9 million. In addition,  the Company had undrawn commitments of $8.1 million
on home  equity  lines and other  lines,  as well as $73.7  million  on  undrawn
commitments to funds commercial  business loans. Time deposit accounts scheduled
to mature within one year or less at June 30, 1999, totaled $187.1 million,  and
management believes that a significant portion of such deposits will remain with
the Company.

The Company and the Bank are  required to maintain  minimum  regulatory  capital
ratios.  The  following is a summary of the Bank's  actual  capital  amounts and
ratios at June 30,  1999,  compared to the FDIC  minimum  capital  requirements:

<TABLE>
<CAPTION>

                                        ACTUAL                            MINIMUM
                            -------------------------------    ------------------------------
                               AMOUNT           PERCENT           AMOUNT          PERCENT
                                                  (DOLLARS IN THOUSANDS)
<S>                            <C>                <C>             <C>              <C>
Leverage (Tier I) Capital      $119,875           15.42%          $31,092          4.00%
Risk-based capital
     Tier I                     119,875           20.51%           23,377          4.00%
     Total                      127,180           21.76%           46,753          8.00%


</TABLE>

At June 30, 1999, the Company's Tier 1 leverage  ratio, as defined in regulatory
guidelines,   was   21.67%.   At  June   30,   1999,   the   Company's   Tier  1
capital-to-risk-weighted    assets    ratio   was   30.44%,    and   the   total
capital-to-risk-weighted assets ratio was 31.69%.

<PAGE>


YEAR 2000

The  Company's  progress  on its Year 2000 issue is  continuing.  The  Company's
primary service provider  completed its Year 2000 readiness  testing during 1998
and the Company  conducted  its testing  during the quarter ended March 31, 1999
incurring a $120,000  "validation"  fee. During the quarter,  the Company tested
all of its mission critical  systems,  and processed  transactions with dates up
through and including  March 31, 2000. The results of the Company's tests showed
no  significant  exceptions.  The Company  incurred  $24,000 in costs during the
quarter  ended  March  31,  1999  to  contract  with an  independent  technology
consultant to provide verification and validation of the Company's risk and cost
estimates,  systems  testing  and  contingency  plans.  The results of the study
showed no significant  exceptions,  as well. During the three months ended March
31, 1999 the Company  also  incurred  Y2K  remediation  expenses of $158,000 for
system  upgrades,  $40,000 for  contingency  planning,  and $40,000 for customer
awareness programs.

The Company's investment  subsidiary changed its primary service provider during
the  quarter  ended  June 30,  1999.  The  Company is  monitoring  the year 2000
readiness of this  provider and  anticipates  that there will be no  significant
exceptions.

The  Company's  mission  critical  systems have been tested and are certified as
year 2000 compliant at June 30, 1999,  and the Company  expects all others to be
tested and compliant by September 30, 1999.  The Company is also  monitoring the
year 2000  readiness of major  vendors for which the Company is reliant upon for
bank operations.

The Company  expects that when the century  changes,  any  disruption in service
will come not from a failure of its systems or the systems of the providers with
whom it  interfaces,  but rather  from  outside  agencies ( i.e.,  electric  and
telephone companies ) beyond its control.  Therefore,  contingency  planning and
business  resumption  planning  will be based on the Company's  formal  Disaster
Recovery Program, which includes using such things as emergency power generation
or reverting to manual systems until problems can be corrected.

The Company has written a Disaster  Recovery  Program and Year 2000  Contingency
Plan,  and  management  expects to test the plan before  September 30, 1999. The
Company is also undertaking various customer awareness programs,  such as posted
statements,  mailing of FDIC brochures,  and anticipates  providing  information
through its website.

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

<PAGE>

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 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.

<PAGE>

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 exposure to 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.  ALCO 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  manages its exposure to interest rate risk in the following ways:

*      emphasizing the  origination of adjustable rate mortgage loans,  and to a
       lesser extent  commercial real estate,  commercial  business and consumer
       loans;

*      selling substantially all of its fixed rate residential mortgage loans in
       the secondary market;

*      utilizing  FHLB advances to better  structure the  maturities of interest
       rate sensitive liabilities;

*      investing in short-term  securities 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.

<PAGE>


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

           Not applicable

ITEM 5 -  OTHER INFORMATION

           Not applicable


ITEM 6 -  EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits.

                   27.   Financial Data Schedule

          (b)  Reports on Form 8-K. No reports on Form 8-K were filed during the
               quarter ending June 30, 1999.


                                      II-1

<PAGE>


                                   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:   August  13, 1999               /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

                                      II-2