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

                                    FORM 10-Q

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

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2002
                                               -----------------

                                       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 OF                     (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                      IDENTIFICATION NO.)


                     32 SECOND STREET, TROY, NY              12180
                    ----------------------------           ----------
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)    (ZIP CODE)

                                  (518)270-3313
                                  -------------
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 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:

     COMMON SHARES, $.0001 PAR VALUE                      9,434,887
     -------------------------------                      ---------
            (TITLE OF CLASS)                   (OUTSTANDING AT JANUARY 31, 2003)


<PAGE>



                                             TROY FINANCIAL CORPORATION
                                                      FORM 10-Q
                                                  DECEMBER 31, 2002


<table>
<caption>
INDEX
-----

PART I                FINANCIAL INFORMATION                                                                    PAGE
                      ---------------------

                   <c>                                                                                       <c>
Item 1.               Consolidated Interim Financial Statements

                      Consolidated Statements of Financial Condition as of
                      December 31, 2002 (Unaudited) and September 30, 2002                                       1

                      Consolidated Statements of Income for the three months ended December 31, 2002
                      and 2001 (Unaudited)                                                                       2

                      Consolidated Statements of Changes in Shareholders' Equity for the three
                      months ended December 31, 2002 and 2001 (Unaudited)                                        3

                      Consolidated Statements of Cash Flows for the three months ended December 31,
                      2002 and 2001 (Unaudited)                                                                  4

                      Notes to Unaudited Consolidated Interim Financial Statements                               5

Item 2.               Management's Discussion and Analysis of Financial Condition and Results of
                      Operations                                                                                 7

Item 3.               Quantitative and Qualitative Disclosures about Market Risk                                16

Item 4.               Controls and Procedures                                                                   16

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

Item 1.               Legal Proceedings                                                                         18

Item 2.               Changes in Securities                                                                     18

Item 3.               Default on Senior Securities                                                              18

Item 4.               Submission of Matters to a Vote of Security Holders                                       18

Item 5.               Other Information                                                                         18

Item 6.               Exhibits and Reports on Form 8-K                                                          18

                      Signatures                                                                                19

</table>


<PAGE>




                           TROY FINANCIAL CORPORATION
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<table>
<caption>
                                                                 DECEMBER 31, 2002   SEPTEMBER 30, 2002
                                                                 -----------------   ------------------
         Assets                                                      (UNAUDITED)
         ------

                                                                 <c>                 <c>
Cash and due from banks                                             $    22,980         $    34,020
Loans held for sale                                                       2,231                 891
Securities available for sale, at fair value                            300,727             394,067
Securities held to maturity (fair value of $903 and $954 at
   December 31, 2002 and  September 30, 2002, respectively)                 838                 883
Net loans receivable                                                    762,817             750,529
Accrued interest receivable                                               5,874               6,129
Other real estate owned                                                     125                 352
Investment in real estate partnerships                                   19,476              19,566
Premises and equipment, net                                              16,015              16,268
Goodwill, net                                                            30,909              30,909
Core deposit intangibles, net                                               300                 311
Bank-owned life insurance                                                11,636              11,487
Other assets                                                             22,732              23,465
                                                                    -----------         -----------
         Total assets                                               $ 1,196,660         $ 1,288,877
                                                                    ===========         ===========
         Liabilities and Shareholders' Equity
         ------------------------------------
Liabilities:
   Deposits:
      Savings accounts                                              $   274,323         $   271,632
      Money market accounts                                             130,816             108,635
      N.O.W. and demand accounts                                        203,778             205,732
      Time accounts                                                     285,392             296,969
                                                                    -----------         -----------
         Total deposits                                                 894,309             882,968
   Mortgagors' escrow accounts                                            4,418               1,575
   Securities sold under agreements to repurchase                        12,622             134,872
   Short-term borrowings                                                 11,500                  --
   Long-term debt                                                        97,446              87,483
   Other liabilities and accrued expenses                                20,180              24,125
                                                                    -----------         -----------
         Total liabilities                                            1,040,475           1,131,023
                                                                    -----------         -----------
Shareholders' equity:
   Preferred stock, $.0001 par value per share; 15,000,000 shares
     authorized, none issued                                                 --                  --
   Common stock, $.0001 par value per share; 60,000,000 shares
     authorized, 12,139,021 shares issued                                     1                   1
   Additional paid-in capital                                           127,403             125,583
   Unallocated common stock held by ESOP                                 (6,638)             (7,406)
   Unvested restricted stock awards                                      (2,334)             (2,548)
   Treasury stock, at cost (2,689,184 shares at December 31,
     2002 and 2,453,186 shares at September 30, 2002)                   (47,815)            (41,116)
   Retained earnings, substantially restricted                           82,171              80,078
   Accumulated other comprehensive income                                 3,397               3,262
                                                                    -----------         -----------
         Total shareholders' equity                                     156,185             157,854
                                                                    -----------         -----------
                Total liabilities and shareholders' equity          $ 1,196,660         $ 1,288,877
                                                                    ===========         ===========

</table>


                See accompanying notes to unaudited consolidated
                         interim financial statements.



                                       1
<PAGE>
                           TROY FINANCIAL CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                              THREE MONTHS ENDED
                                                                 DECEMBER 31,

                                                              2002         2001
                                                            --------------------
                                                                 (Unaudited)
Interest and dividend income:
     Interest and fees on loans                             $ 13,408    $ 14,258
     Securities available for sale:
         Taxable                                               1,617       2,004
         Tax-exempt                                              889         783
                                                            --------    --------
                Total securities available for sale            2,506       2,787
                                                            --------    --------
     Securities held to maturity                                  18          35
     Federal funds sold and other                                  5          11
                                                            --------    --------
         Total interest and dividend income                   15,937      17,091
                                                            --------    --------
Interest expense:
     Deposit and escrow accounts                               3,996       5,575
     Short-term borrowings                                       223         570
     Long-term debt                                            1,094         720
                                                            --------    --------
         Total interest expense                                5,313       6,865
                                                            --------    --------
         Net interest income                                  10,624      10,226
Provision for loan losses                                        150         366
                                                            --------    --------
      Net interest income after provision for loan losses     10,474       9,860
                                                            --------    --------
Non-interest income:
     Service charges on deposits                                 535         467
     Net rental income from real estate partnerships             388          --
     Trust service fees                                          174         237
     Loan servicing fees                                          56          75
     Commissions from annuity sales                               52         102
     Net gains from securities transactions                       66          13
     Net gains from mortgage loan sales                           58          28
     Other income                                                535         572
                                                            --------    --------
         Total non-interest income                             1,864       1,494
                                                            --------    --------
Non-interest expenses:
     Compensation and employee benefits                        4,531       4,072
     Net occupancy                                               596         579
     Furniture, fixtures and equipment                           203         253
     Computer charges                                            513         533
     Professional, legal and other fees                          214         197
     Printing, postage and telephone                             283         247
     Other real estate expenses (income), net                    (11)          3
     Core deposit intangible amortization                         12          12
     Other expenses                                            1,082         857
                                                            --------    --------
         Total non-interest expenses                           7,423       6,753
                                                            --------    --------
 Income before income tax expense                              4,915       4,601
 Income tax expense                                            1,580       1,502
                                                            --------    --------
 Net income                                                 $  3,335    $  3,099
                                                            ========    ========
Earnings per common share:
   Basic                                                    $    .39    $    .34
                                                            ========    ========
   Diluted                                                  $    .37    $    .32
                                                            ========    ========


   All per share data has been adjusted for the 5% stock dividend issued on
   March 29, 2002. See accompanying notes to unaudited consolidated interim
   financial statements.



                                       2
<PAGE>
                           TROY FINANCIAL CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
           (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (UNAUDITED)

<table>
<caption>
                                                                                            THREE MONTHS ENDED
                                                                        ---------------------------------------------------------
                                                                               DECEMBER 31, 2002            DECEMBER 31, 2001


                                                                         <c>            <c>          <c>           <c>
COMMON STOCK
     Balance at beginning and end of period                                 $       1                   $       1
                                                                            ---------                   ---------
ADDITIONAL PAID-IN CAPITAL
     Balance at beginning of period                                         $ 125,583                   $ 118,018
     Adjustment for ESOP shares released for allocation                         1,419                         713
     Adjustment for stock options exercised                                      (170)                        (45)
     Tax-benefit from vesting of restricted stock awards                          548                         338
     Adjustment for grant of restricted stock awards                               23                          94
                                                                            ---------                   ---------
     Balance at end of period                                               $ 127,403                   $ 119,118
                                                                            =========                   =========

UNALLOCATED COMMON STOCK HELD BY ESOP
     Balance at beginning of period                                         $  (7,406)                  $  (8,202)
     ESOP shares released for allocation (81,346 and
       84,412 shares, respectively)                                               768                         796
                                                                            ---------                   ---------
     Balance at end of period                                               $ ( 6,638)                 $  ( 7,406)
                                                                            =========                   =========

UNVESTED RESTRICTED STOCK AWARDS
     Balance at beginning of period                                         $  (2,548)                  $  (3,136)
     Grant of restricted stock awards (2,250
       and 9,713 shares, respectively)                                            (61)                       (214)
     Amortization of restricted stock awards                                      275                         251
                                                                            ---------                   ---------
     Balance at end of period                                               $  (2,334)                  $  (3,099)
                                                                            =========                   =========

TREASURY STOCK
     Balance at beginning of period                                         $ (41,116)                  $ (29,554)
     Purchase of treasury stock (262,905 and 115,306
       shares, respectively)                                                   (7,161)                     (2,524)
     Grant of restricted stock awards (2,250 and 9,713
       shares, respectively)                                                       38                         120
     Stock options exercised (24,657 and 23,384
       shares, respectively)                                                      424                         286
                                                                            ---------                   ---------
     Balance at end of period                                               $ (47,815)                  $ (31,672)
                                                                            =========                   =========

RETAINED EARNINGS
     Balance at beginning of period                                         $  80,078                   $  84,380
     Net income                                                                 3,335      $ 3,335          3,099     $  3,099
     Cash dividends ($.14 and $.11 per share, respectively)                    (1,242)                      (1,097)
                                                                            ---------                   ---------
     Balance at end of period                                               $  82,171                   $  86,382
                                                                            =========                   =========

ACCUMULATED OTHER COMPREHENSIVE INCOME
     Balance at beginning of period                                         $   3,262                   $   3,239
     Unrealized  net holding gains  (losses) on available
       for sale  securities arising during the period
       (pre-tax $287 and ($1,292), respectively)                                               175                        (775)
     Reclassification adjustment for net (gains) losses
       on available for sale securities realized in net
       income (pre-tax ($66) and ($13), respectively)                                          (40)                         (8)
                                                                                          --------                    --------
     Other comprehensive income (loss)                                            135          135           (783)        (783)
                                                                            ---------     --------      ---------     --------
     Comprehensive income                                                                 $  3,470                    $  2,316
                                                                                          ========                    ========
     Balance at end of period                                               $   3,397                   $   2,456
                                                                            =========                   =========
     Total shareholders' equity                                             $ 156,185                   $ 165,780
                                                                            =========                   =========

</table>

     All per share data has been adjusted for the 5% stock dividend issued on
     March 29, 2002. See accompanying notes to unaudited consolidated interim
     financial statements.



                                       3
<PAGE>
                           TROY FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                        DOLLARS IN THOUSANDS (UNAUDITED)

<table>
<caption>
                                                                                   THREE MONTHS ENDED
                                                                                      DECEMBER 31,
                                                                                 ----------------------
                                                                                    2002         2001
                                                                                 ----------------------

                                                                              <c>          <c>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                       $   3,335    $   3,099
Adjustments to reconcile net income to net cash provided by
  operating activities:
  Depreciation                                                                         426          391
  Core deposit intangible amortization                                                  12           12
  Net amortization on securities                                                       187           83
  Provision for loan losses                                                            150          366
  Amortization of restricted stock awards                                              275          251
  ESOP compensation expense                                                            552          459
  Net accretion of purchase accounting adjustments                                    (118)        (118)
  Net gains on sale of other real estate owned                                         (31)         (14)
  Write-down of other real estate                                                       --            5
  Net gains on sale of other assets                                                    (59)          --
  Net gains from securities transactions                                               (66)         (13)
  Net gains from mortgage loan sales                                                   (58)         (28)
  Proceeds from sales of loans held for sale                                         4,001        3,463
  Net loans made to customers and held for sale                                     (5,283)      (3,194)
  Net increase in accrued interest receivable, bank-owned life insurance,
      investments in real estate partnerships and other assets                         644          426
  Net decrease in other liabilities and accrued expenses                            (2,032)      (2,126)
                                                                                 ---------    ---------
Net cash provided by operating activities                                            1,935        3,062
                                                                                 ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities/calls/paydowns of securities held to maturity                  45        1,067
Net loans made to customers                                                        (12,321)        (649)
Purchase of AFS securities                                                        (103,152)     (54,875)
Proceeds from sale of AFS securities                                               127,914        1,220
Proceeds from maturities/calls/paydowns of AFS securities                           68,949       57,231
Capital expenditures, net                                                              (82)        (177)
Proceeds from sales of other assets                                                    195           --
Proceeds from sales of other real estate owned                                         258          180
                                                                                 ---------    ---------
Net cash provided by investing activities                                           81,806        3,997
                                                                                 ---------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits                                                 11,324       (5,038)
Net increase in mortgagors' escrow accounts                                          2,843        2,884
Net (decrease) increase in securities sold under agreements to repurchase         (122,262)         792
Net increase (decrease) in short-term borrowings                                    11,500      (66,200)
Payments on long-term debt                                                             (37)          --
Proceeds from long-term debt                                                        10,000       15,000
Cash dividends paid on common stock                                                 (1,242)      (1,097)
Proceeds from stock options exercised                                                  254          241
Purchase of common stock for treasury                                               (7,161)      (2,524)
                                                                                 ---------    ---------
Net cash used in financing activities                                              (94,781)     (55,942)
                                                                                 ---------    ---------
Net decrease in cash and cash equivalents                                          (11,040)     (48,883)
Cash and cash equivalents at beginning of period                                    34,020       74,618
                                                                                 ---------    ---------
Cash and cash equivalents at end of period                                       $  22,980    $  25,735
                                                                                 =========    =========
SUPPLEMENTAL CASH FLOW INFORMATION:
   Interest paid                                                                 $   5,164    $   6,947
   Income taxes paid                                                                   750          350
Transfer of loans to other real estate owned                                            --           64
Adjustment of securities available for sale to fair value, net of  tax                 135         (783)
Grant of restricted stock awards (at fair value on grant date)                          61          214

</table>



                See accompanying notes to unaudited consolidated
                         interim financial statements.


                                       4
<PAGE>


                           TROY FINANCIAL CORPORATION
                         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
     majority-owned subsidiaries. All material intercompany accounts and
     transactions have been eliminated. The equity method of accounting is used
     for investments in which the Company has significant influence, generally
     ownership of common stock or partnership interest of at least 20% and not
     more than 50%. Amounts in prior period's unaudited consolidated interim
     financial statements are reclassified whenever necessary to conform to the
     current period's presentation. In management's opinion, the unaudited
     consolidated interim financial statements reflect all adjustments of a
     normal recurring nature, and disclosures 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 2002 Annual Report to Stockholders. 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, 2003, or any other interim periods.

NOTE 2. EARNINGS PER SHARE

     Basic earnings per share are calculated by dividing net income by the
     weighted average number of common shares outstanding during the period.
     Diluted earnings per share is computed in a manner similar to that of basic
     earnings per share except that the weighted average number of common shares
     outstanding is increased to include the number of additional common shares
     that would have been outstanding if all potentially dilutive common shares
     (such as stock options and unvested restricted stock) were issued during
     the reporting period, computed using the treasury stock method. 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 sets forth certain information regarding the calculation of
     basic and diluted earnings per share for the three-month periods ended
     December 31 (all share and per share amounts have been restated to reflect
     the 5% stock dividend issued on March 29, 2002):


                                                          2002          2001
                                                         ------        ------
          Net income (in thousands)                    $    3,335   $    3,099
                                                       ==========   ==========
          Weighted average common shares                8,560,750    9,147,327

          Dilutive effect of potential common shares
            related to stock compensation plans           521,607      501,155
                                                       ----------   ----------
          Weighted average common shares including
            potential dilution                          9,082,357    9,648,482
                                                       ==========   ==========
          Basic earnings per share                     $      .39   $      .34

          Diluted earnings per share                   $      .37   $      .32



                                       5
<PAGE>


NOTE 3. RECENT ACCOUNTING PRONOUNCEMENTS

     In December 2002, the Financial Accounting Standards Board ("FASB") issued
     Statement of Financial Accounting Standards ("SFAS") No. 148, "Accounting
     for Stock-Based Compensation-Transition and Disclosure", which amends SFAS
     No. 123, "Accounting for Stock-Based Compensation." Statement No. 148
     provides alternative methods of transition for a voluntary change to the
     fair value based method of accounting for stock-based employee
     compensation. In addition, Statement No. 148 amends the disclosure
     requirements of Statement No. 123 to require more prominent and more
     frequent disclosures in financial statements about the effects of
     stock-based compensation. The Company will be adopting the new disclosure
     requirements of SFAS No. 148 as of January 1, 2003. The Company does not
     expect that SFAS No. 148 will have a material impact on its consolidated
     financial statements, as the Company does not currently intend on changing
     its method of accounting for stock-based employee compensation.

     In November 2002, the FASB issued FASB Interpretation No. 45 (FIN No. 45),
     "Guarantor's Accounting and Disclosure Requirements for Guarantees,
     Including Indirect Guarantees of Indebtedness of Others; an Interpretation
     of FASB Statements No. 5, 57, and 107 and rescission of FASB Interpretation
     No. 34." FIN No. 45 requires certain new disclosures and potential
     liability-recognition for the fair value at issuance of guarantees that
     fall within its scope. Under FIN No. 45, the Company does not issue any
     guarantees that would require liability-recognition or disclosure, other
     than its standby letters of credit.

     The Company has issued conditional commitments in the form of standby
     letters of credit to guarantee payment on behalf of customers and to
     guarantee the performance of customers to third parties. Standby letters of
     credit generally arise in connection with lending relationships. The credit
     risk involved in issuing these instruments is essentially the same as that
     involved in extending loans to customers. Contingent obligations under
     standby letters of credit totaled $14.3 million at December 31, 2002 and
     represent the maximum potential future payments the Company could be
     required to make. Typically, these instruments have terms of one year or
     less and expire unused; therefore, the total amounts do not necessarily
     represent future cash requirements. Each customer is evaluated individually
     for creditworthiness under the same underwriting standards used for
     commitments to extend credit and on-balance sheet instruments. Company
     policies governing loan collateral apply to standby letters of credit at
     the time of credit extension. Loan-to-value ratios will generally range
     from 50% for movable assets, such as inventory, 75% for real estate, and
     100% for liquid assets, such as bank certificates of deposit. The Company
     had performance and financial standby letters of credit at December 31,
     2002 of $13.1 million and $1.2 million, respectively.










                                       6
<PAGE>


                           TROY FINANCIAL CORPORATION
                                    FORM 10-Q
                                DECEMBER 31, 2002


================================================================================
                   PART I - FINANCIAL INFORMATION (CONTINUED)

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

GENERAL
-------

Troy Financial Corporation (the "Company") is a community based, full-service
financial services company offering a wide variety of business, retail, and
municipal banking products, as well as a full range of trust, insurance, and
investment services. The Company is the bank holding company of The Troy Savings
Bank (the "Savings Bank") and The Troy Commercial Bank (the "Commercial Bank").
The Company's primary sources of funds are deposits and borrowings, which it
uses to originate real estate mortgages, both residential and commercial,
commercial business loans, and consumer loans throughout its primary market area
which consists of the eight New York counties of Albany, Greene, Saratoga,
Schenectady, Schoharie, Warren, Washington, and Rensselaer. The Company's Common
Stock is traded on the NASDAQ Stock Market National Market Tier under the symbol
"TRYF."

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

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

CRITICAL ACCOUNTING POLICIES
----------------------------

Management of the Company considers the accounting policy relating to the
allowance for loan losses to be a critical accounting policy given the
uncertainty in evaluating the level of the allowance required to cover credit
losses inherent in the loan portfolio and the material effect that such
judgments can have on the results of operations. The Company's policy on the
allowance for loan losses is disclosed in note 1 to the consolidated financial
statements included in the Company's 2002 Annual Report to Shareholders. A more
detailed description of the Company's methodology for determining the allowance
for loan losses is included in the "Lending Activities" section of the Company's
Form 10-K for the year ended September 30, 2002. All accounting policies are
important, and as such, the Company encourages the reader to review each of the
policies included in note 1 to the consolidated financial statements included in
the Company's 2002 Annual Report to Shareholders, to obtain a better
understanding of how the Company's financial performance is reported.



                                       7
<page>

FORWARD-LOOKING STATEMENTS
--------------------------

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

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

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

o    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.

Except as required by law, 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.

FINANCIAL CONDITION
-------------------

Total assets were $1.2 billion at December 31, 2002, a decrease of $92.2
million, or 7.2% from the $1.3 billion at September 30, 2002. The decrease was
principally due to a reduction in securities available sale, as the Company sold
short-term U.S. Treasury bills and used the proceeds to pay-off short-term
borrowings.



                                       8
<page>

Cash and cash equivalents were $23.0 million at December 31, 2002, a decrease of
$11.0 million, or 32.5% from the $34.0 million at September 30, 2002. The
decrease was principally due to a reduction in interest-bearing deposit balances
held at the Federal Home Loan Bank ("FHLB") and lower cash items in process of
collection.

Securities available for sale ("AFS") were $300.7 million, a decrease of $93.3
million, or 23.7% from $394.1 million as of September 30, 2002. The decrease in
AFS securities was principally from the sale of $125.0 million in U.S Treasury
bills, offset somewhat by an increase in municipal securities to provide
collateral to support the Company's municipal deposit growth. AFS securities
represented 25.1% of total assets at December 31, 2002, down from 30.6% at
September 30, 2002.

Loans receivable were $777.4 million at December 31, 2002, an increase of $12.3
million, or 1.6% over the $765.1 million at September 30, 2002. The following
table shows the loan portfolio composition as of the respective statement of
financial condition dates:

<table>
<caption>
                                                           DECEMBER 31, 2002                       SEPTEMBER 30, 2002
                                                  ------------------------------------- -----------------------------------------
                                                      (IN THOUSANDS)       % OF LOANS          (IN THOUSANDS)       % OF LOANS
                                                                           ----------                               ----------
     
                                                <c>                  <c>                 <c>                  <c>
     Real estate loans:
         Residential                                    $ 287,262             36.9%              $ 300,776             39.2%
         Commercial                                       314,377             40.3                 298,995             39.0
         Construction                                      22,376              2.9                  17,075              2.3
                                                        ---------        ---------               ---------        ---------
             Total real estate loans                      624,015             80.1                 616,846             80.5
                                                        ---------        ---------               ---------        ---------
     Commercial business loans                            121,807             15.6                 118,349             15.4
                                                        ---------        ---------               ---------        ---------
     Consumer loans:
         Home equity lines                                 18,389              2.4                  14,796              1.9
         Other consumer                                    14,516              1.9                  16,678              2.2
                                                        ---------        ---------               ---------        ---------
             Total consumer loans                          32,905              4.3                  31,474              4.1
                                                        ---------        ---------               ---------        ---------
     Gross loans                                          778,727            100.0%                766,669            100.0%
                                                                         =========                                =========
     Net deferred loan fees/costs and
         unearned discounts                                (1,310)                                  (1,602)
                                                        ---------                                ---------
             Total loans receivable                     $ 777,417                                $ 765,067
                                                        =========                                =========
</table>


Loan growth was moderate during the period, as growth in commercial real estate
and commercial business loans more than offset the run-off in the Company's
residential mortgage and consumer loan portfolios. The Company continues to
expand its commercial loan portfolio, which includes commercial real estate,
construction and commercial business loans, which now represent 58.8% of total
loans. The Company continues to experience accelerated prepayments in the
residential loan portfolio as existing customers continue to refinance, due to
lower interest rates. Since the Company does not hold its 30-year loan
production, but instead sells the loans in the secondary market, portfolio
run-off has exceeded retained production.

During the quarter, the Company supplemented growth in its commercial loan
portfolio with a successful home equity loan campaign, which increased
outstandings $3.6 million, or 24.3% from September 30, 2002. The home equity
line product is indexed to prime and has a lower initial offering rate. The
Company expects to continue to emphasize growth in this portfolio. Subject to
market conditions, the Company also intends to continue to increase its
commercial real estate and commercial business loan portfolios as part of its
strategy to diversify its portfolio and increase commercial banking activities.



                                       9
<PAGE>



Non-performing assets at December 31, 2002 were $2.4 million, or .20% of total
assets, up modestly from the .19% of total assets at September 30, 2002, due
primarily to the reduction in total assets between the periods. The table below
sets forth the amounts and categories of the Company's non-performing assets.


<table>
<caption>
                                                                      DECEMBER 31,             SEPTEMBER 30,
                                                                         2002                      2002
                                                                         ----                      ----
                                                                                 (IN THOUSANDS)

                                                                   <c>                        <c>
  Non-accrual loans:
      Real estate loans:
         Residential                                                  $  1,300                   $  1,147
         Commercial                                                        541                        555
         Construction                                                       --                         --
                                                                      --------                   --------
           Total real estate loans                                       1,841                      1,702
      Commercial business loans                                            262                        264
      Home equity lines                                                     58                         30
      Other consumer loans                                                 148                        101
                                                                      --------                   --------
         Total non-accrual loans                                         2,309                      2,097
  Troubled debt restructurings                                              --                         --
                                                                      --------                   --------
           Total non-performing loans                                 $  2,309                   $  2,097
                                                                      ========                   ========
  Other real estate owned:
         Residential real estate                                            --                        227
         Commercial real estate                                            125                        125
                                                                      --------                   --------
            Total other real estate owned                                  125                        352
                                                                      --------                   --------
  Total non-performing assets                                         $  2,434                   $  2,449
                                                                      ========                   ========
  Allowance for loan losses                                           $ 14,600                   $ 14,538
                                                                      ========                   ========
  Allowance for loan losses as a percentage of
         non-performing loans                                           632.31%                    693.28%
  Allowance for loan losses as a percentage of total loans                1.88%                      1.90%
  Non-performing loans as a percentage of total loans                     0.30%                      0.27%
  Non-performing assets as a percentage of total assets                   0.20%                      0.19%

</table>



The slight increase in non-performing loans at December 31, 2002 as compared to
September 30, 2002 was principally due an increase in non-performing residential
and consumer loans. The Company does not expect the increase to result in higher
net charge-offs, as most of the increase was in loans that are secured.

The following table summarizes the activity in other real estate owned for the
periods presented:

                                                THREE MONTHS ENDED DECEMBER 31,
                                                -------------------------------
                                                     2002           2001
                                                     ----           ----
                                                       (IN THOUSANDS)
   Other real estate beginning of period            $ 352          $ 265
   Transfer of loans to other real estate owned        --             64
   Sales of other real estate, net                   (227)          (166)
   Write-down of other real estate                     --             (5)
                                                    -----          -----
   Other real estate end of period                  $ 125          $ 158
                                                    =====          =====



                                       10
<page>

Additionally, at December 31, 2002, the Company identified approximately $12.8
million of loans having more than normal credit risk, an increase of $7.4
million from the $5.4 million reported at September 30, 2002. The increase was
due to the downgrade of a commercial loan, which is secured by real estate,
inventory and equipment. The Company believes that if economic and/or business
conditions deteriorate in its lending area, some of these loans could become
non-performing in the future.

The allowance for loan losses was $14.6 million or 1.88% of period end loans at
December 31, 2002, and provided coverage of non-performing loans of 632.31%,
compared to coverage of 693.28% and 1.90% of period end loans as of September
30, 2002. The following summarizes the activity in the allowance for loan
losses:

                                               THREE MONTHS ENDED DECEMBER 31,
                                               -------------------------------
                                                  2002             2001
                                                  ----             ----
                                                     (IN THOUSANDS)
     Allowance at beginning of the period      $ 14,538         $ 14,333
         Charge-offs                               (108)            (372)
         Recoveries                                  20               76
                                               --------         --------
             Net charge-offs                        (88)            (296)
         Provision for loan losses                  150              366
                                               --------         --------
     Allowance at end of the period            $ 14,600         $ 14,403
                                               ========         ========

Total deposits were $894.3 million at December 31, 2002, up $11.3 million or
1.3% from the $883.0 million at September 30, 2002. The following table shows
the deposit composition as of the two dates:


<table>
<caption>
                                          DECEMBER 31, 2002                       SEPTEMBER 30, 2002
                                          -----------------                       ------------------
                                    (IN THOUSANDS)  % OF DEPOSITS           (IN THOUSANDS)  % OF DEPOSITS
 
                                  <c>                <c>                  <c>                <c>
  Savings                             $ 274,323          30.7%                $ 271,632          30.8%
  Money market                          130,816          14.6                   108,635          12.3
  NOW                                   129,569          14.5                   124,319          14.1
  Non-interest-bearing demand            74,209           8.3                    81,413           9.2
                                      ---------     ---------                 ---------     ---------
     Total core deposits                608,917          68.1%                  585,999          66.4%
                                      ---------     ---------                 ---------     ---------
  Certificates of deposits              285,392          31.9                   296,969          33.6
                                      ---------     ---------                 ---------     ---------
     Total Deposits                   $ 894,309         100.0%                $ 882,968         100.0%
                                      =========     =========                 =========     =========
</table>


Deposits increased principally from growth in municipal money market deposits
which more than offset the run-off in higher costing certificates of deposits
("CD's"). The Company has aggressively lowered rates on its CD's in an effort to
replace these higher cost deposits with lower costing core deposits (all deposit
accounts other than time deposits). As a result of these efforts, CD's are down
$11.6 million, or 3.9% from September 30, 2002. Core deposits are up $22.9
million, or 3.9% and now represent 68.1% of total deposits up from 66.4% at
September 30, 2002. The Company expects CD's to continue to decrease, as
scheduled maturities in the next several months are at somewhat higher rates
than the Company's current offering rates.

The Company decreased its total borrowings, which are primarily with the Federal
Home Loan Bank of New York ("FHLB"), to $121.6 million at December 31, 2002, a
decrease of $100.8 million from the $222.4 million at September 30, 2002.
Short-term borrowings (including repurchase agreements) decreased $110.8
million, or 82.1%, whereas long-term borrowings increased $10.0 million or
11.4%, as the Company took advantage of the lower interest rates to lock-in some
long-term financing. However, the Company expects to continue to leverage the
balance sheet with long-term borrowings, especially in light of historically low
interest rates, to fund loan growth and to pre-fund much higher rate borrowings
scheduled to mature in the third and fourth quarters of fiscal 2003. At December
31, 2002, the Company still had additional available credit of $38.5 million
under its overnight line and $50.0 million under its one-month advance program
with the FHLB.



                                       11
<page>

Shareholders' equity at December 31, 2002 was $156.2 million, a decrease of $1.7
million or 1.1% from the $157.9 million at September 30, 2002. The decrease was
principally due to the $7.2 million cost to repurchase 262,905 shares of the
Company's common stock. Offsetting these decreases was $2.1 million of net
income retained after cash dividends, a $2.2 million increase due to the release
of ESOP shares, $.8 million due to the amortization of restricted stock awards
including the tax benefits on shares vesting, $.3 million from stock option
exercises and the $.1 million positive change in the Company's net unrealized
gain (loss) on securities available for sale, net of taxes, due to a decrease in
long-term interest rates from the comparable period.

Shareholders' equity as a percentage of total assets increased to 13.1% at
December 31, 2002 compared to 12.3% at September 30, 2002, primarily due to the
decrease in total assets. Book value per common share was $16.53 at December 31,
2002, compared to $16.30 at September 30, 2002.

COMPARISON OF OPERATING RESULTS
-------------------------------
FOR THE THREE MONTHS ENDED DECEMBER 31, 2002 AND 2001
-----------------------------------------------------

General
-------

For the three months ended December 31, 2002, the Company recorded net income of
$3.3 million, an increase of $236 thousand, or 7.6%, compared to the three month
period ended December 31, 2001. Basic and diluted earnings per share were $.39
and $.37 respectively, an increase of 14.7% and 15.6% compared to basic and
diluted earnings per share of $.34 and $.32, respectively for the three months
ended December 31, 2001. For the three months ended December 31, 2002, weighted
average common shares - basic were 8,560,750, down 586,577, or 6.4%, from the
comparable period in the prior year due to the Company's share repurchase
programs. Weighted average shares - diluted were down 566,125, or 5.9% due to
the higher average market price of the Company's stock during the period ended
December 31, 2002, which slightly increased the number of shares to be included
for dilution.

Annualized return on average assets for the three months ended December 31, 2002
was 1.12% and 1.13% for the 2001 period. Annualized return on average equity was
8.52% for the three months ended December 31, 2002 and 7.46% for the 2001
period.

Net Interest Income
-------------------

Net interest income on a tax-equivalent basis was $11.2 million for the three
months ended December 31, 2002, an increase of $504 thousand, or 4.7%, from the
$10.7 million for the comparable period of the prior fiscal year. The increase
was principally volume related, with average earning assets up $71.7 million, or
7.2%, from the comparable period of the prior fiscal year.

Interest income for the three months ended December 31, 2002 was $16.5 million
on a tax-equivalent basis, down $1.0 million, or 6.0% from the comparable period
last year. The effect of the $71.7 million increase in average earning assets,
was more than offset by the 87 basis point decrease in the Company's yield on
average earning assets, due to the generally lower level of interest rates
compared to the same period of the prior year.

Average earning assets increased principally in the loan and securities
available for sale portfolios, which on average grew 1.3% and 27.7%,
respectively. Average loans increased $10.2 million principally due to the
increase in the Company's commercial real estate and commercial business loan
portfolios, as the Company continues to emphasize its commercial banking
strategy. The yield on the Company's average loan portfolio decreased 52 basis
points, as the Company's commercial business loan portfolio, which is
principally variable rate, re-priced lower due to the reduction in short-term
market interest rates since the prior year. Furthermore, the



                                       12
<page>

yield on the Company's residential portfolio was adversely impacted by
refinancing of higher yielding fixed rate loans, as well as the continued
downward repricing of the Bank's adjustable rate mortgage portfolio. The Company
continues to expect its interest income to be adversely impacted by the on-going
re-pricing of its adjustable rate mortgage portfolio, as well as the re-pricing
of its commercial mortgage portfolio due to scheduled and customer-driven
re-pricing.

Average securities available for sale increased $62.7 million or 27.7%,
principally from the increase in the tax- exempt municipal securities portfolio
to provide collateral to support the municipal deposit growth. The yield on the
average securities portfolio decreased 154 basis points as the Company's
relatively short average life tax-exempt securities portfolio re-priced faster
(yield on average municipal securities portfolio decreased 188 basis points) in
response to the decrease in overall market interest rates. In addition, recent
purchases in the tax-exempt municipal securities portfolio (most of which have a
maturity of one-year or less) have been purchased at rates much lower than the
current average portfolio yield due to the lower interest rate environment.

Interest expense for the three months ended December 31, 2002, was $5.3 million,
a decrease of $1.6 million or 22.6%. Average interest bearing liabilities
increased $88.6 million or 10.6%, principally due to municipal money market
deposits generated by the Commercial Bank. The Company has aggressively
re-priced its deposits, especially its CD's, resulting in an average cost of
funds of 2.27%, a reduction of 98 basis points. The average cost of CD's was
2.92% for the three months ended December 31, 2002, down 154 basis points from
the comparable period of the prior year.

The Company's net interest margin was 4.18% for the three months ended December
31, 2002, down 10 basis points from the comparable period of the prior year. The
Company's net interest margin decrease from the three months ended December 31,
2001 was due primarily to the interest expense on debt acquired as part of the
Company's real estate joint venture investment in May 2002. The net interest
spread was 3.95% up 11 basis points from the comparable period of the prior
year. Aggressive re-pricing of deposits, especially time deposits and savings
accounts, reduced the Company's average cost of funds by 98 basis points, more
than offsetting the decrease in the yield on average earning assets of 87 basis
points. The Company expects its net interest margin to decrease modestly over
the next quarter, as the current period's net interest income included
prepayment fees on a commercial loan payoff, as well as an interest recovery on
a loan previously charged-off. The combined impact of these non-recurring items
increased the margin by approximately 3 basis points. The Company expects to
continue to reduce its cost of funds, as approximately $98.3 million of time
deposits will be re-pricing over the next three months at lower rates, and the
Company has recently lowered its savings deposit rate. The Company had $134.8
million of average earning assets with no funding costs for the three months
ended December 31, 2002, a decrease of $16.8 million, or 11.1%, from the $151.6
million for the three months ended December 31, 2001, principally due to the
increase in non-earning assets, representing the Company's increased investment
in real estate partnerships.

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

Provision for Loan Losses
-------------------------

The Company establishes an allowance for loan losses based on an analysis of the
risk in its loan portfolio including concentrations of credit, past loan loss
experience, current economic conditions, amount and composition of the loan
portfolio, estimated fair market value of underlying collateral, delinquencies
and other factors. Accordingly, the analysis of the adequacy of the allowance
for loan losses is not based solely on the level of non-performing loans or any
other single factor.



                                       13
<page>

The provision for loan losses was $150 thousand, or .08% annualized of average
loans for the three months ended December 31, 2002, down $216 thousand, or 59.0%
from December 31, 2001 which represented .19% of average loans. Net charge-offs
were $ 88 thousand, or .05% of average loans for the quarter ended December 31,
2002, compared to net charge-offs of $296 thousand, or .15% of average loans in
the comparable period last year. Non-performing loans were $2.3 million or .30%
of total loans at December 31, 2002, down $1.1 million from December 31, 2001,
when they were .45% of total loans. At December 31, 2002, the allowance for loan
losses was $14.6 million or 1.88% of period end loans, and provided coverage of
non-performing loans of 632.31%, compared to 1.89% and 419.3%, respectively, as
of December 31, 2001.

Non-Interest Income
-------------------

Non-interest income was $1.9 million for the three months ended December 31,
2002, up $370 thousand, or 24.8% from the comparable period of the prior fiscal
year. The growth was principally due to the Company's real estate joint venture,
which had net rental income of $388 thousand; there was no net rental income in
the comparable period. Service charges on deposit accounts increased $68
thousand or 14.6% due in part to growth in the number of accounts, as well as
higher service fees on commercial business accounts, as lower market interest
rates reduced the earnings credit available on account balances. Somewhat
offsetting these increases was lower loan servicing fees, trust fees and annuity
commissions, each of which were adversely impacted by current market conditions.

Non-Interest Expenses
---------------------

Non-interest expenses were $7.4 million for the three months ended December 31,
2002, up $670 thousand, or 9.9% from the comparable period of the prior fiscal
year, due to an increase in personnel and other expenses. Compensation and
employee benefits were up $459 thousand, or 11.3% due to increased pension and
ESOP expense as well as merit-related salary increases. Pension costs increased
approximately $200 thousand, as lower interest rates increased pension
liabilities and weak investment performance this past fiscal year reduced plan
assets. ESOP- related compensation costs increased $93 thousand due to the
higher average market price of the Company's stock during the period. Other
expenses increased $225 thousand or 26.3% due principally to the Company's home
equity loan campaign during and non-reimbursable operating costs of the
Company's real estate partnership. Marketing and other related costs for the
Company's home equity campaign during the quarter were approximately $115
thousand. Costs related to the Company's real estate partnership were
approximately $93 thousand; there were no similar costs in the comparable
period.

Income Tax Expense
------------------

Income tax expense for the three months ended December 31, 2002, was $1.6
million, an increase of $78 thousand, or 5.2% from the comparable period of the
prior fiscal year. The Company's effective tax rates for the three months ended
December 31, 2002 and 2001, were 32.1% and 32.6%, respectively. The increase in
income tax expense is principally from the impact of the higher income before
income tax this year; the lower effective tax rate reflects tax-exempt income
that represented a higher portion of the Company's income before tax in this
period, compared to the same period last year.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

Liquidity is the ability to generate cash flows to meet present and expected
future funding needs. Management monitors the Company's liquidity position on a
daily basis to evaluate its ability to meet expected and unexpected depositor
withdrawals, fund loan commitments and make new loans or investments.


                                       14
<page>

The Company's primary sources of funds for operations are deposits, borrowings,
principal and interest payments on loans and maturities of securities available
for sale.

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

Net cash of $1.9 million was provided by operating activities during the three
months ended December 31, 2002, down $1.1 million from the comparable
three-month period. The decrease was principally due to the change in loans held
for sale, as the Company originated more loans held for sale than sold in the
three months ended December 31, 2002, whereas in the comparable quarter loan
sales exceeded originations. Offsetting this decrease in part, was an increase
in net income.

Investing activities provided net cash of $81.8 million during the three months
ended December 31, 2002. Net securities activities provided $93.8 million, which
was offset somewhat by the $12.3 million used to fund loan growth. Financing
activities used $94.8 million, as the Company reduced short-term borrowings by
$110.8 million, paid cash dividends of $1.2 million and used $7.2 million to
repurchase 262,905 shares of its common stock, offset in part by an increase in
deposits of $11.3 million and long-term borrowings of $10.0 million.

An important source of the Company's funds is the Company's core deposits.
Management believes that a substantial portion of the Company's $894.3 million
of deposits are a dependable source of funds due to long-term customer
relationships. The Company does not currently use brokered deposits as a source
of funds, and as of December 31, 2002, time deposit accounts having balances of
$100 thousand or more, totaled $57.6 million, or 6.4%, of total deposits.

The Company anticipates that it will have sufficient funds to meet its current
commitments. At December 31, 2002, the Company had commitments to originate
loans of $37.5 million. In addition, the Company had undrawn commitments of
$130.8 million on commercial business, home equity and other lines of credit.
Certificates of deposits which are scheduled to mature in one year or less at
December 31, 2002, totaled $227.9 million, and management believes that a
significant portion of such deposits will remain with the Company.

On April 16, 2002, the Company announced a plan to repurchase up to 1,009,276
shares of its common stock or approximately 10.0% of its outstanding shares.
Since the announcement, the Company has repurchased 709,470 shares of its stock
at a cost of $19.2 million. As part of its capital management program, the
Company expects to continue to repurchase shares from time to time as market and
business conditions warrant, improving return on average equity and earnings per
share. The Company still has authority under its current stock repurchase
program to repurchase 299,806 additional shares.

On an unconsolidated basis, the Company's primary source of funds is dividends
from the Banks. At December 31, 2002, the Company had $7.8 million of cash and
securities available for sale at the holding company level on an unconsolidated
basis to use for direct activities of the Company. New York State Banking law
provides that all dividends declared in any calendar year shall not exceed the
total of the Bank's net profits for the year combined with its retained net
profits of the preceding two years, less any required transfer to surplus,
without the prior approval from the Superintendent of Banks. The Savings Bank
had already received such approval consequently it has already paid dividends to
the Parent Company in calendar year 2002 in excess of that amount. The Company
does expect the Savings Bank to resume paying cash dividends to the Parent
Company in calendar year 2003. The Commercial Bank has earned $1.3 million in
net profits since inception in July 2000,



                                       15
<page>

and has paid cash dividends of $586 thousand; the balance is available for
distribution.

At December 31, 2002, the Savings Bank, the Commercial Bank, and the Company all
met the capital adequacy requirements to which they were subject. Also as of
that date, each entity met the standards to be classified as well-capitalized
under applicable regulations.

The following is a summary of the actual capital amounts and ratios at December
31, 2002, compared to minimum capital requirements:

                                       ACTUAL               MINIMUM
                                       AMOUNT         %        %
                                       ------        ---      ---
         TIER 1 CAPITAL:
            COMMERCIAL BANK           $ 10,720       9.54%   4.00%
            SAVINGS BANK              $ 96,588       9.26%   4.00%
            CONSOLIDATED              $121,623      10.60%   4.00%
         TIER 1 RISK BASED CAPITAL:
            COMMERCIAL BANK           $ 10,720      41.45%   4.00%
            SAVINGS BANK              $ 96,588      12.82%   4.00%
            CONSOLIDATED              $121,623      15.65%   4.00%
         TOTAL RISK BASED CAPITAL:
            COMMERCIAL BANK           $ 10,724      41.47%   8.00%
            SAVINGS BANK              $106,113      13.65%   8.00%
            CONSOLIDATED              $131,622      16.94%   8.00%




                   PART I - FINANCIAL INFORMATION (CONTINUED)

ITEM 3.   Quantitative and Qualitative Disclosures About Market Risk

The Company believes there have been no material changes in the Company's
interest rate risk position since September 30, 2002. 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.

ITEM 4.    Controls and Procedures

(a) The Company's management, including the Chief Executive Officer and Chief
Financial Officer evaluated the effectiveness of the design and operation of the
Company's disclosure controls and procedures (as defined in Rule 13a-14(c) under
the Securities Exchange Act of 1934, as amended) (the "Exchange Act") as of a
date (the "Evaluation Date") within 90 days prior to the filing date of this
report. Based upon that evaluation, the Company's management, including the
Chief Executive Officer and Chief Financial Officer concluded that, as of the
Evaluation Date, the Company's disclosure controls and procedures were effective
in timely alerting them to any material information relating to the Company and
its subsidiaries required to be included in the Company's Exchange Act filings.

(b) There were no significant changes made in the Company's internal controls or
in other factors that that could significantly affect these internal controls
subsequent to the date of the evaluation performed by the Company's Chief
Executive Officer and Chief Financial Officer.



                                       16
<PAGE>


         TABLE #1  AVERAGE BALANCES, INTEREST, YIELD AND RATE
                   ------------------------------------------

  The following table sets forth certain information relating to the Company's
  average earning assets and the resultant yields, as well as the interest
  expense on average interest-bearing liabilities, expressed both in dollars and
  rates. All average balances are daily average balances. Statutory tax rates
  were used to calculate tax-exempt income on a tax-equivalent basis.
  Non-accruing loans have been included in the table as loans receivable with
  interest earned recognized on a cash basis only. The yield on securities
  available for sale is computed based on amortized cost.

<table>
<caption>
                                                                       FOR THE THREE MONTHS ENDED DECEMBER 31,
                                                                -----------------------------------------------------
                                                                          2002                                       2001
                                                                -------------------------                 ----------------------
                                                  AVERAGE                                   AVERAGE
                                                  BALANCE       INTEREST       YIELD/RATE   BALANCE       INTEREST    YIELD/RATE
                                                  -------       --------       ----------   -------       --------    ----------
                                                                           (DOLLARS IN THOUSANDS)

                                             <c>             <c>             <c>       <c>             <c>           <c>
EARNING ASSETS
  Total loans                                   $   769,396     $ 13,480          7.01%   $   759,175     $ 14,287        7.53%
  Loans held for sale                                 2,162           40          7.40%         1,724           31        7.19%
  Securities held to maturity                           864           18          8.33%         1,727           35        8.11%
  Securities available for sale:
      Taxable                                       132,001        1,632          4.95%       137,119        2,019        5.89%
      Tax-exempt                                    156,655        1,338          3.42%        88,885        1,178        5.30%
                                                -----------     --------                  -----------     --------
        Total securities available for sale         288,656        2,970          4.12%       226,004        3,197        5.66%
                                                -----------     --------                  -----------     --------
  Federal funds sold and other                        1,411            5          1.41%         2,134           11        2.05%
                                                -----------     --------                  -----------     --------
    Total earning assets                          1,062,489       16,513          6.22%       990,764       17,561        7.09%
                                                                --------                                  --------
  Allowance for loan losses                         (14,629)                                  (14,416)
  Other assets, net                                 131,167                                   109,759
                                                -----------                               -----------
         Total assets                           $ 1,179,027                               $ 1,086,107
                                                ===========                               ===========
INTEREST-BEARING LIABILITIES
  Deposits:

    NOW and Super NOW accounts                  $   124,712     $    272           .87%   $   116,594     $    372        1.27%
    Money market accounts                           120,881          536          1.76%        35,667          201        2.24%
    Savings accounts                                270,977        1,036          1.52%       254,431        1,294        2.02%
    Time deposits                                   290,242        2,139          2.92%       327,959        3,690        4.46%
    Escrow accounts                                   3,381           13          1.53%         3,810           18        1.87%
                                                -----------     --------                  -----------     --------
    Total interest-bearing deposits                 810,193        3,996          1.96%       738,461        5,575        3.00%
                                                -----------     --------                  -----------     --------
  Borrowings:
   Securities sold U/A to repurchase                 15,208          170          4.43%        13,546          175        5.13%
   Short-term borrowings                             13,987           53          1.50%        29,486          395        5.31%
   Long-term debt                                    88,328        1,094          4.91%        57,663          720        4.95%
                                                -----------     --------                  -----------     --------
        Total borrowings                            117,523        1,317          4.45%       100,695        1,290        5.08%
                                                -----------     --------                  -----------     --------
    Total interest-bearing liabilities              927,716        5,313          2.27%       839,156        6,865        3.25%
                                                                --------                                  --------
  Non-interest-bearing deposits                      74,830                                    61,463
  Other liabilities                                  21,122                                    20,733
  Shareholders' equity                              155,359                                   164,755
                                                -----------                               -----------
         Total liabilities & equity             $ 1,179,027                               $ 1,086,107
                                                ===========                               ===========
  Net interest spread                                                             3.95%                                   3.84%
  Net interest income/net interest margin                       $ 11,200          4.18%                   $ 10,696        4.28%
  Ratio of earning assets to
     interest-bearing liabilities                                               114.53%                                 118.07%
  Less: tax equivalent adjustment                                    576                                       470
                                                                --------                                  --------
  Net interest income as per
     consolidated financial statements                          $ 10,624                                  $ 10,226
                                                                ========                                  ========
</table>



                                       17
<PAGE>
                           TROY FINANCIAL CORPORATION
                                    FORM 10-Q

                                DECEMBER 31, 2002

================================================================================

                           PART II - OTHER INFORMATION

Item 1.     Legal Proceedings
            -----------------

There are no material pending legal proceedings, other than ordinary routine
litigation incidental to the business, to which the Company, or any of its
subsidiaries is a party or which their property is subject.

Item 2.     Changes in Securities
            ---------------------

                     None

Item 3.     Defaults on Senior Securities
            -----------------------------

                     Not Applicable

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

                     None

Item 5.     Other Information
            -----------------

                     None

Item 6.     Exhibits and Reports on Form 8-K
            --------------------------------

            (a)  Exhibits

                     99.1  Certification of Chief Executive Officer pursuant to
                           Section 906 of Sarbanes-Oxley Act of 2002
                     99.2  Certification of Chief Financial Officer pursuant to
                           Section 906 of Sarbanes-Oxley Act of 2002

            (b)  Reports on Form 8-K

                 (i)  The Company filed a Current Report on Form 8-K with the
                      Securities Commission on December 5, 2002 (date of report
                      December 5, 2002) (regarding a press release announcing
                      the date of the Company's annual meeting of shareholders).



                                       18
<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
                                --------------------------



Date: February 14, 2003         /s/ Daniel J. Hogarty, Jr.
                                --------------------------
                                 Daniel J. Hogarty, Jr.
                                 Chairman of the Board, President
                                 and Chief Executive Officer
                                 (Principal Executive Officer)

Date: February 14, 2003         /s/ David J. DeLuca
                                -------------------
                                 David J. DeLuca
                                 Senior Vice President & Chief Financial Officer
                                 (Principal Financial and
                                 Accounting Officer)





                                       19
<PAGE>
                                 CERTIFICATIONS


I, Daniel J. Hogarty, Jr., certify that:

         1. I have reviewed this quarterly report on Form 10-Q of Troy Financial
Corporation;

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

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

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

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

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

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

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

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

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

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

Date:  February 14, 2003

By:  /s/ Daniel J. Hogarty, Jr.
     --------------------------

    Daniel J. Hogarty, Jr.
    Chairman, President and Chief Executive Officer



                                       20
<PAGE>



                                 CERTIFICATIONS

I, David J. DeLuca, certify that:

         1. I have reviewed this quarterly report on Form 10-Q of Troy Financial
Corporation;

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

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

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

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

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

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

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

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

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

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

Date:  February 14, 2003

By:  /s/ David J. DeLuca
     -------------------

    David J. DeLuca
    Senior Vice President & Chief Financial Officer



                                       21