SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                  For the quarterly period ended: MARCH 31, 2000

                                       OR

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

             For the transition period from               to

                        Commission file number: 000-25439

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

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

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

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

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

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

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest  practicable date: AS OF MAY 10, 2000:
11,404,775 SHARES OF COMMON STOCK, PAR VALUE $.0001 PER SHARE.


<PAGE>


                                      INDEX

<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION

                                                                             PAGE
                                                                             ----
<S>                                                                          <C>
Item 1:    Financial Statements

                    Consolidated Statements of Condition, March 31,
                     2000 (unaudited) and September 30, 1999 ...............   1

                    Consolidated Statements of Income, Three and Six
                     Months Ended March 31, 2000 and 1999
                     (unaudited) ...........................................   2

                    Consolidated Statements of Cash Flows, Six Months
                     Ended March 31, 2000 and 1999
                     (unaudited) ...........................................   3

                    Consolidated Statements of Changes in
                     Shareholders' Equity, Six Months Ended
                     March 31, 2000 and 1999 (unaudited) ...................   4

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

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

Item 3:    Quantitative and Qualitative Disclosures About Market Risk.......  19


PART II - OTHER INFORMATION

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

                    Signature page .......................................  II-2
</TABLE>











<PAGE>





PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS










































<PAGE>



                           TROY FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CONDITION

<TABLE>
<CAPTION>
                                                                                               March 31, 2000   September 30, 1999
                                                                                               --------------   ------------------
                   ASSETS                                                                       (In thousands, except share data)
                   ------
                                                                                                 (Unaudited)
<S>                                                                                               <C>                <C>
Cash & due from banks ......................................................................      $  19,553          $  35,885
Federal funds sold .........................................................................          9,391                 50
                                                                                                  ---------          ---------
          Total cash and cash equivalents ..................................................         28,944             35,935
Loans held for sale ........................................................................          1,466              4,064
Securities available for sale, at fair value ...............................................        249,603            280,871
Investment securities held to maturity  (fair value of $2,423 and $2,582
       at March 31, 2000 and September 30, 1999, respectively) .............................          2,442              2,534
Net loans receivable .......................................................................        584,946            556,142
Accrued interest receivable ................................................................          5,827              5,270
Other real estate owned ....................................................................          2,784              1,845
Premises & equipment, net ..................................................................         15,528             15,049
Other assets ...............................................................................         18,555             13,386
                                                                                                  ---------          ---------
        Total assets .......................................................................      $ 910,095          $ 915,096
                                                                                                  =========          =========



                  LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
   Deposits:
       Savings accounts ....................................................................        188,445            191,968
       Money market accounts ...............................................................         20,653             20,348
       N.O.W. and demand accounts ..........................................................        135,504            123,345
       Time accounts .......................................................................        216,108            227,712
                                                                                                  ---------          ---------
          Total deposits ...................................................................        560,710            563,373
       Mortgagors' escrow accounts .........................................................          2,532              1,596
       Securities sold under agreements to repurchase ......................................         86,442              3,736
       Short-term borrowings ...............................................................         20,000            100,700
       Long-term debt ......................................................................         53,266             44,497
       Accrued interest payable ............................................................            786                487
       Official bank checks ................................................................          2,959              9,651
       Contributions payable ...............................................................          2,772              2,664
       Other liabilities and accrued expenses ..............................................         10,132              7,953
                                                                                                  ---------          ---------
          Total liabilities ................................................................        739,599            734,657



Shareholders' Equity:
       Preferred Stock, $.0001 par value; 15,000,000 shares authorized,
          none issued ......................................................................           --                 --
       Common Stock, $.0001 par value; 60,000,000 shares authorized,
          12,139,021 issued at March 31, 2000 and September 30, 1999 .......................              1                  1
       Additional paid in capital ..........................................................        117,804            117,759
       Unallocated common stock held by ESOP ...............................................         (9,027)            (9,620)
       Unvested restricted stock awards ....................................................         (4,342)              --
       Treasury stock, at cost .............................................................         (7,978)              --
       Retained earnings, substantially restricted .........................................         75,334             72,699
       Accumulated other comprehensive loss ................................................         (1,296)              (400)
                                                                                                  ---------          ---------
          Total shareholders' equity .......................................................        170,496            180,439
                                                                                                  ---------          ---------
                                                  Total liabilities and shareholders' equity      $ 910,095          $ 915,096
                                                                                                  =========          =========
</TABLE>

 See accompanying notes to unaudited consolidated interim financial statements.



                                       1
<PAGE>
                           TROY FINANCIAL CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                 For the three months ended         For the six months ended
                                                                          March 31,                         March 31,
                                                                         ----------                        ---------
                                                                           (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                    2000             1999              2000             1999
                                                                    ----             ----              ----             ----
<S>                                                                 <C>              <C>            <C>             <C>
Interest & dividend income:
     Interest and fees on loans                                     $11,377          $9,544         $22,629         $19,162
     Securities available for sale:
         Taxable                                                      1,982           1,636           3,852           3,468
         Tax exempt                                                     748             532           1,449           1,044
                                                               ------------    ------------    ------------    ------------
                                                                      2,730           2,168           5,301           4,512
     Investment securities held to maturity                              49              56              99             118
     Federal funds sold                                                 184             527             355             670
                                                               ------------    ------------    ------------    ------------
         Total interest and dividend income                          14,340          12,295          28,384          24,462
                                                               ------------    ------------    ------------    ------------
Interest expense:
     Deposits and escrow accounts                                     4,559           5,368           9,215          10,817
     Short-term borrowings                                            1,013              95           1,615             196
     Long-term debt                                                     684             645           1,335           1,295
                                                               ------------    ------------    ------------    ------------
         Total interest expense                                       6,256           6,108          12,165          12,308
                                                               ------------    ------------    ------------    ------------
         Net interest income                                          8,084           6,187          16,219          12,154
     Provision for loan losses                                          538             812           1,338           1,625
                                                                               ------------    ------------    ------------
         Net interest income after provision for loan losses          7,546           5,375          14,881          10,529
                                                               ------------    ------------    ------------    ------------
Non-interest income:
     Service charges on deposits                                        250             212             511             442
     Loan servicing fees                                                124             106             256             232
     Trust service fees                                                 137             155             339             305
     Net gains from securities transactions                               2               1               5               9
     Net (losses) gains from mortgage loan sales                        (50)            196             (73)            184
     Other income                                                       212             176             788             297
                                                               ------------    ------------    ------------    ------------
         Total non-interest income                                      675             846           1,826           1,469
                                                               ------------    ------------    ------------    ------------
Non-interest expense:
     Compensation & employee benefits                                 3,078           2,536           6,166           5,268
     Occupancy                                                          532             522             997           1,027
     Furniture, fixtures, & equipment                                   217             205             411             378
     Computer charges                                                   383             349             817             741
     Professional, legal and other fees                                 303             475             712             656
     Printing, postage and telephone                                    214             168             448             320
     Other real estate owned                                             60             553             163             619
     Contributions                                                       16           4,299              88           4,369
     Other                                                              597           1,311           1,485           1,881
                                                               ------------    ------------    ------------    ------------
         Total non-interest expense                                   5,400          10,418          11,287          15,259
                                                               ------------    ------------    ------------    ------------
Income (loss) before income tax expense  (benefit)                    2,821          (4,197)          5,420          (3,261)
Income tax expense (benefit)                                            752          (1,848)          1,471          (1,615)
                                                               ------------    ------------    ------------    ------------
Net income  (loss)                                                   $2,069         ($2,349)         $3,949         ($1,646)
                                                               ============    ============    ============    ============
     Earnings per share:
         Basic                                                        $0.21             n/a           $0.38             n/a
         Diluted                                                      $0.21             n/a           $0.38             n/a
</TABLE>

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

 See accompanying notes to unaudited consolidated interim financial statements.


                                       2
<PAGE>

                           TROY FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                 FOR THE SIX MONTHS ENDED
                                                                                             MARCH 31, 2000        MARCH 31, 1999
                                                                                     -----------------------------------------------
                                                                                                      (IN THOUSANDS)
<S>                                                                                               <C>                  <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:

CASH FLOWS FROM OPERATING ACTIVITIES:

     Net income/(loss)                                                                            $3,949               ($1,646)
     Adjustments to reconcile net income /(loss) to net cash (used in)
     provided by operating activities:
       Depreciation and amortization                                                                 656                   653
       Provision for loan losses                                                                   1,338                 1,625
       Amortization of restricted stock awards                                                       482                    --
       ESOP compensation expense                                                                     638                    --
       Net accretion of discount on securities                                                      (918)               (1,670)
       Net gains from securities transactions                                                         (5)                   (9)
       Net loss/(gain) from mortgage loan sales                                                       73                  (184)
       Net loss on sale of other real estate owned                                                     4                    13
       Write down of other real estate owned                                                         362                   229
       Proceeds from sales of loans held for sale                                                  8,232                40,891
       Net loans made to customers and held for sale                                              (5,707)              (37,162)
       (Increase)/decrease in accrued interest receivable                                           (557)                  414
       Increase in other assets                                                                   (4,570)               (2,063)
       Increase in accrued interest payable                                                          299                   333
       Charitable foundation contribution                                                             --                 4,084
       Decrease  in official bank checks, contributions payable
          accrued expenses and other liabilities                                                  (4,405)               (2,820)
                                                                                      ------------------    ------------------
          Total adjustments                                                                       (4,078)                4,334
                                                                                      ------------------    ------------------
          Net cash (used in) provided by operating activities                                       (129)                2,688
                                                                                      ------------------    ------------------

CASH FLOWS FROM INVESTING ACTIVITIES:

       Proceeds from sale of securities available for sale                                        31,904                 1,046
       Proceeds from maturity and paydown of securities available for sale                       230,452               220,972
       Purchases of securities available for sale                                               (231,660)             (298,841)
       Proceeds from maturity of investment securities                                                92                   733
       Proceeds from sale of other real estate owned                                               2,514                   345
       Net loans made to customers                                                               (33,961)              (30,885)
       Purchases of premises and equipment                                                        (1,135)               (1,715)
                                                                                      ------------------    ------------------
          Net cash  used in investing activities                                                  (1,794)             (108,345)
                                                                                      ------------------    ------------------

CASH FLOWS FROM FINANCING ACTIVITIES:

       Net decrease in deposits                                                                   (2,663)              (11,487)
       Net increase in mortgagors' escrow accounts                                                   936                   445
       Excess subscription funds held in escrow                                                       --                77,396
       Net increase (decrease)  in securities sold under agreements to repurchase                 82,706                  (619)
       Net decrease in short term borrowings                                                     (80,700)                   --
       Proceeds from issuance of long term debt                                                    9,000                 5,700
       Payments on long term debt                                                                   (231)                 (218)
       Dividends paid                                                                             (1,179)                   --
       Purchase of treasury stock                                                                (12,937)                   --
       Net proceeds from stock offering                                                               --               113,676
                                                                                      ------------------    ------------------
          Net cash (used in) provided by financing activities                                     (5,068)              184,893
                                                                                      ------------------    ------------------

Net (decrease) increase in cash and cash equivalents                                              (6,991)               79,236
                                                                                      ------------------    ------------------

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

Cash and cash equivalents at end of period                                                       $28,944               $97,151
                                                                                      ==================    ==================

SUPPLEMENTAL INFORMATION

   CASH PAID FOR:

     Interest on deposits and borrowings                                                         $11,866               $11,975
     Income taxes                                                                                  1,330                   330

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:

     Net reduction in loans resulting from the transfer  to other real estate owned                3,819                   320
     Adjustment of securities available for sale to fair  value, net of tax                         (896)                 (193)
     Grant of restricted stock awards                                                              4,824                    --
</TABLE>


See accompanying notes to unaudited consolidated interim financial statements


                                       3
<PAGE>
                           TROY FINANCIAL CORPORATION

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                         For the six months ended
                                                                                                  March 31,
(in thousands, except share and per share data)                                           2000                  1999
==============================================================================================================================
<S>                                                                               <C>         <C>          <C>         <C>
     COMMON STOCK

         Balance at beginning of period                                              $1                    $   -
         Issuance of 11,730,575 shares of $0.0001 par value
            common stock in initial public offering                                   -                        1
         Issuance of 408,446 shares of $0.0001 par value
            common stock to The Troy Savings Bank Community Foundation                -                        -

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

         Balance at end of period                                                    $1                       $1
------------------------------------------------------------------------------------------------------------------------------

     ADDITIONAL PAID-IN CAPITAL

         Balance at beginning of period                                        $117,759                    $   -
         Issuance of 11,730,575 shares of common stock in
            initial public offering, net of offering costs of $3,630                  -                  113,675

         Issuance of 408,446 shares of common stock to The Troy Savings
            Bank Charitable Foundation                                                -                    4,084

         Adjustment for ESOP shares released for allocation                          45                        -

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

         Balance at end of period                                              $117,804                 $117,759
------------------------------------------------------------------------------------------------------------------------------

     UNALLOCATED COMMON STOCK HELD BY ESOP

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

         ESOP shares released for allocation                                        593
                                                                                                               -
------------------------------------------------------------------------------------------------------------------------------

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

     UNVESTED RESTRICTED STOCK AWARDS

         Balance at beginning of period                                            $  -                        -

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

         Amortization of restricted stock awards                                    482                        -

------------------------------------------------------------------------------------------------------------------------------
         Balance at end of period                                               $(4,342)                       -
------------------------------------------------------------------------------------------------------------------------------

     TREASURY STOCK

         Balance at beginning of period                                           $   -                        -

         Purchase of treasury stock (1,180,411 shares)                          (12,937)                       -

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

------------------------------------------------------------------------------------------------------------------------------
         Balance at end of period                                               $(7,978)                       -
------------------------------------------------------------------------------------------------------------------------------

     RETAINED EARNINGS

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

         Net income (loss)                                                        3,949       $3,949      (1,646)     ($1,646)

         Cash dividends ($0.10 per share)                                        (1,179)

         Adjustment for grant of restricted stock awards                           (135)

------------------------------------------------------------------------------------------------------------------------------
         Balance at end of period                                               $75,334                  $68,976
------------------------------------------------------------------------------------------------------------------------------

     ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

         Balance at beginning of period                                           $(400)                    $407

         Unrealized net holding losses on securities available for
            sale arising during the period (pre-tax  ($1,488) and ($313))                       (893)                    (188)

         Reclassification adjustment for net gains on securities
            available for sale realized in net income (pre-tax $5 and $9)                         (3)                      (5)
------------------------------------------------------------------------------------------------------------------------------

         Other comprehensive loss                                                 $(896)        (896)      $(193)        (193)
------------------------------------------------------------------------------------------------------------------------------

         Comprehensive income (loss)                                                          $3,053                   ($1,839)
                                                                                              ======                   =======
------------------------------------------------------------------------------------------------------------------------------

         Balance at end of period                                               $(1,296)                    $214
------------------------------------------------------------------------------------------------------------------------------

         Total shareholders' equity at March 31                                $170,496                 $186,950
==============================================================================================================================
</TABLE>

  See accompanying notes to unaudited consolidated interim financial statements


                                       4
<PAGE>

                         Notes to Unaudited Consolidated

                          Interim Financial Statements

Note 1. Basis of Presentation

The unaudited  consolidated interim financial statements include the accounts of
Troy Financial Corporation (the "Company") and its wholly owned subsidiary,  The
Troy Savings Bank (the "Bank"), and the Bank's subsidiaries.  The Company became
the bank  holding  company  of the  Bank on March  31,  1999.  Accordingly,  all
financial  data as of and for  periods  prior to such date are the  consolidated
data of the  Bank and its  subsidiaries.  The  September  30,  1999  data in the
Consolidated  Statements  of  Condition is derived  from the  Company's  audited
consolidated  financial  statements.  All intercompany accounts and transactions
have been eliminated in consolidation.

The unaudited  consolidated interim financial statements reflect all adjustments
of a normal recurring nature which are necessary for a fair  presentation of the
results for the interim periods presented and should be read in conjunction with
the  consolidated  financial  statements  and  related  notes  included  in  the
Company's  annual report on Form 10-K as of and for the year ended September 30,
1999.  The results of  operations  for the interim  periods are not  necessarily
indicative  of the results of operations to be expected for the full fiscal year
ending  September 30, 2000.  Reclassifications  are made  whenever  necessary to
conform to the current year presentation.

Note 2. Earnings Per Share

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


                                       5
<PAGE>

per share calculations.

The following table sets forth certain information  regarding the calculation of
basic and diluted  earnings per share for the three month and six month  periods
ended March 31, 2000:


<TABLE>
<CAPTION>
                                                                         Three months ended      Six months ended
                                                                           March 31, 2000          March 31, 2000
                                                                           --------------          --------------
                                                                      (in thousands, except share and per share data)
                                                                      -----------------------------------------------
<S>                                                                         <C>                    <C>
Net income                                                                        $2,069                 $3,949
                                                                                  ======                 ======

Weighted average shares                                                       10,085,567             10,397,529

Dilutive effect of potential common shares
  related to stock compensation plans                                              6,687                  8,216
                                                                                   -----                  -----
Weighted average common shares including
  potential dilution                                                          10,092,254             10,405,745
                                                                              ==========             ==========


Basic earnings per share                                                           $0.21                  $0.38
Diluted earnings per share                                                         $0.21                  $0.38
</TABLE>


Note 3. Comprehensive Income

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

Note 4. Impact of New Accounting Standards

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

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

GENERAL

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


                                       6
<PAGE>

employee  stock  ownership plan (the "ESOP")  which allowed the ESOP to purchase
971,122 shares of Common Stock in the open market. The Company's Common Stock is
traded on the NASDAQ Stock Market National Market Tier under the symbol "TRYF."

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

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

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

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

FINANCIAL CONDITION

The Company's  total assets were $910.1 million at March 31, 2000, a decrease of
$5.0 million,  or 0.6% from the $915.1  million at September 30, 1999.  Cash and
cash  equivalents  were $28.9  million  at March 31,  2000,  a decrease  of $7.0
million  from the  $35.9  million  at  September  30,  1999.  The  decrease  was
principally  due to a $16.0  million  reduction in excess cash  reserves held in
anticipation  of an increased  demand for cash by depositors in  anticipation of
Year 2000 liquidity  needs,  offset by a $9.3 million  increase in federal funds
sold.

The Bank's  securities  available for sale portfolio was $249.6 million at March
31, 2000, a


                                       7
<PAGE>

decrease of $31.3 million,  or 11.1% from the $280.9 million as of September 30,
1999.  The decrease in securities was  principally  due to the use of funds from
repayments  and maturities for the continued  growth in the loan  portfolio,  as
well as the repurchase of 1.1 million  shares of common stock,  of which 485,561
were  purchased for the Company's  Long-Term  Equity  Compensation  Plan, as the
Company  completed its first repurchase  program which was approved in September
1999.  The Company  awarded  446,165 of the 485,561 total shares of common stock
purchased  under  the  Company's  Long-Term  Equity  Compensation  Plan with the
balance included in treasury stock, at cost.

Total loans  receivable were $596.3 million as of March 31, 2000, an increase of
$29.3  million or 5.2% over the $566.9  million as of September  30,  1999.  The
following  table  shows  the loan  portfolio  composition  as of the  respective
balance sheet dates:

<TABLE>
<CAPTION>
                                                                               March 31,                 September 30,
                                                                                 2000                        1999
                                                                      ----------------------------  -----------------------
                                                                                       % of loans                % of loans
                                                                      -----------------------------------------------------
                                                                                               (dollars in thousands)
<S>                                                                     <C>               <C>       <C>              <C>
Real estate loans:
     Residential mortgage                                               $226,622          38.0%     $221,721         39.1%
     Commercial                                                          224,350          37.6%      216,700         38.2%
     Construction                                                         17,675           3.0%       13,761          2.4%
                                                                          ------          ----        ------         ----
         Total real estate loans                                        468,647          78.6%      452,182         79.7%
                                                                         -------         -----       -------        -----
Commercial business loans                                                 84,448          14.1%       66,274         11.7%
                                                                          ------         -----        ------        -----
Consumer loans:
     Home equity lines of credit                                           6,488           1.1%        6,776          1.2%
     Other consumer                                                       37,006           6.2%       42,081          7.4%
                                                                          ------          ----        ------         ----
          Total consumer loans                                            43,494           7.3%       48,857          8.6%
                                                                          ------          ----        ------         ----
Gross loans                                                              596,589         100.0%      567,313        100.0%
                                                                                        ======                     ======
Net deferred loan fees and costs and unearned discount                      (338)                       (407)
                                                                           -----                       -----
          Total loans                                                   $596,251                    $566,906
                                                                        ========                    ========
</TABLE>

Commercial  real estate loans  increased $7.7 million to $224.4 million at March
31, 2000 or 37.6% of total loans,  from $216.7 million at September 30, 1999, or
38.2% of total loans. Commercial business loans increased $18.2 million to $84.4
million or 14.2% of total  loans at March 31,  2000,  up from  $66.3  million or
11.7% of total loans at September 30, 1999.  Construction  loans  increased $3.9
million to $17.7 million or 3.0% of total loans at March 31, 2000, up from $13.8
million or 2.4% of total  loans at  September  30,  1999.  The  increase  in the
commercial real estate and  construction  loans, as well as commercial  business
loans,  is  consistent  with the  Company's  strategy  to  increase  these  loan
portfolios as part of its emphasis on commercial banking activities. Residential
real estate loans  increased $4.9 million to $226.6  million,  or 38.0% of total
loans, at March 31, 2000, from $221.7 million at September 30, 1999, or 39.1% of
total  loans.  The  increase in  residential  loans is  primarily in home equity
loans.

Non-performing  assets were $8.3  million,  or .92% of total assets at March 31,
2000.  The table below sets forth the amounts and  categories  of the  Company's
non-performing assets.

<TABLE>
<CAPTION>
                                                              March 31,   September 30,
                                                                 2000          1999
                                                              ------------------------
                                                               (dollars in thousands)
<S>                                                             <C>            <C>
Non-accrual loans:
     Real estate loans:
         Residential mortgage                                   $2,509         $2,707
         Commercial mortgage                                     2,717          4,210
                                                                 -----          -----
              Total real estate loans                            5,226          6,917
     Commercial business loans                                       5             10
     Home equity lines of credit                                   105             58
     Other consumer loans                                          166            282
                                                                   ---            ---
              Total non-accrual loans                            5,502          7,267
Troubled debt restructurings                                        56            616
                                                                    --            ---
              Total non-performing loans                        $5,558         $7,883
                                                                ======         ======
Other real estate owned :
     Residential real estate                                       420             76
     Commercial real estate                                      2,364          1,769
                                                                 -----          -----
              Total other real estate owned                      2,784          1,845
                                                                 -----          -----
              Total non-performing assets                       $8,342         $9,728
                                                                ======         ======
Allowance for loan losses                                      $11,305        $10,764
                                                               =======        =======
Allowance for loan losses as a percentage of
     non-performing loans                                       203.40%        136.55%
Non-performing loans as a percentage of
     total loans                                                  0.93%          1.39%
Non-performing assets as a percentage of
     total assets                                                 0.92%          1.06%
</TABLE>

The $2.3 million decrease in non-performing  loans at March 31, 2000 as compared
to  September  30,  1999 was  attributable  primarily  to the  foreclosure  of a
commercial real estate loan which was transferred to other real estate owned and
sold prior to March 31, 2000. Other real estate owned increased by $1.2 million,
principally  from an increase of $1.3 million for the  foreclosure  of two other
commercial  real  estate  loans,  partially  offset by a decrease  of $80,000 in
foreclosed  residential real estate. The following table summarizes the activity
in other real estate owned for the periods presented:


<TABLE>
<CAPTION>
                                                                        Six months ended March 31,
                                                                       2000                     1999
                                                                       ----                     ----
                                                                              (in thousands)
<S>                                                                  <C>                      <C>
Balance at the beginning of the period                                $1,845                   $1,872
       Loans transferred to Other Real Estate                          3,819                      320
       Sale of Other Real Estate                                      (2,518)                    (358)
       Write down of Other Real Estate                                  (362)                    (229)
                                                                       -----                    -----
Balance at the end of the period                                      $2,784                   $1,605
                                                                      ======                   ======
</TABLE>


                                       8
<PAGE>

The allowance for loan losses was $11.3 million, or 1.90% of period end loans at
March 31, 2000,  as compared to $10.8  million,  or 1.90% of period end loans at
September  30,  1999.   The  allowance  for  loan  losses  as  a  percentage  of
non-performing loans was 203.40% at March 31, 2000, as compared to 136.55% as of
September 30, 1999.  There were no loans past due 90 days and still  accruing at
March 31, 2000 or  September  30,  1999.  The  following  table  summarizes  the
activity in the allowance for loan losses:

<TABLE>
<CAPTION>
                                                                            Six months ended March 31,
                                                                           2000                    1999
                                                                           ----                    ----
                                                                                 (in thousands)
<S>                                                                     <C>                       <C>
Allowance at the beginning of the period                                 $10,764                  $8,260
    Charge-offs                                                           (1,208)                   (348)
    Recoveries                                                               411                     182
                                                                             ---                     ---

    Net charge-offs                                                         (797)                   (166)
                                                                            -----                   -----
Provision for loan losses                                                  1,338                   1,625
                                                                           -----                   -----

Allowance at  end of the period                                          $11,305                  $9,719
                                                                         =======                  ======
</TABLE>

Total  deposits  were  $560.7  million at March 31,  2000,  a  decrease  of $2.7
million,  or 0.5% from the $563.4  million at September 30, 1999.  The following
table shows the deposit composition as of the respective balance sheet dates:

<TABLE>
<CAPTION>
                                                   March 31, 2000                           September 30, 1999
                                                   --------------                           ------------------
                                        (In Thousands)        % of Deposits      (In Thousands)        % of Deposits
<S>                                       <C>                      <C>              <C>                      <C>
Savings accounts                          $188,445                 33.6%            $191,968                 34.1%
Time accounts                              216,108                 38.5%             227,712                 40.4%
Money market accounts                       20,653                  3.7%              20,348                  3.6%
NOW & Super NOW accounts                    94,211                 16.8%              86,305                 15.3%
Demand accounts                             41,293                  7.4%              37,040                  6.6%
                                            ------                 ----               ------                 ----
                                          $560,710                100.0%            $563,373                100.0%
                                          ========               ======             ========               ======
</TABLE>

The $2.7  million  decrease in deposits  from  September  30, 1999 is  primarily
attributable  to an $11.6  million  decrease in time  deposits,  a $3.5  million
decrease in savings  deposits,  partially  offset by a $12.2 million increase in
demand deposits and a $305,000 increase in money market accounts. The decline in
time deposit  accounts is attributable to the lower rates paid by the Company in
the  quarter  ended  March  31,  2000  as  compared  to  some  other   financial
institutions.  However,  the Company is currently pricing its time deposits more
competitively in order to retain core deposits and to minimize the outflow.  The
Company  has  recently  filed an  application  with the New York  State  Banking
Department  to establish a commercial  bank  subsidiary  to generate  additional
funding through the acceptance of municipal deposits.

The Company  increased its  borrowings  with the FHLB to $158.2 million at March
31, 2000, an increase of $13.1 million from the $145.2  million at September 30,
1999.  The Company  used the  additional  borrowings  to offset the  decrease in
deposits, to fund the loan growth, and to


                                       9
<PAGE>

repurchase shares of the Company's common stock.

Shareholders'  equity at March 31, 2000 was $170.5  million,  a decrease of $9.9
million or 5.5% from the $180.4  million at September 30, 1999. The decrease was
principally  attributable  to the repurchase of shares of common stock under the
Company's approved  repurchase  program,  of which 485,561 shares were purchased
for the Company's  Long-Term  Equity  Compensation  Plan.  The Company  utilized
445,561 of the shares for awards of restricted  stock under the Long-Term Equity
Compensation  Plan with the remaining  balance  included in treasury  stock,  at
cost.  Shareholders'  equity was increased by the Company's  $3.9 million of net
income,  partially  offset by the $1.2 million of cash dividends paid in the six
months  ended March 31, 2000 and the  $896,000  increase  in  accumulated  other
comprehensive loss.  Shareholders' equity was also increased by $593,000 for the
ESOP  shares  allocated  as of  December  31,  1999  and  $482,000  due  to  the
amortization of restricted stock awards. Shareholders' equity as a percentage of
total assets was 18.73% at March 31, 2000  compared to 19.72% at  September  30,
1999.

TABLE #1 AVERAGE BALANCE, INTEREST, YIELD AND RATE

The following table presents, for the periods indicated, the total dollar amount
of interest  income  from  average  interest  earning  assets and the  resultant
yields, as well as the interest expense on average interest bearing liabilities,
expressed  both in  dollars  and rates.  Tax  equivalent  adjustments  reflected
principally  on municipal  securities  and  commercial  business  loans  totaled
$412,000 in the three month period  ended March 31,  2000,  and $297,000 for the
comparable three month period.  All average balances are daily average balances.
Non-accruing  loans have been  included  in the table as loans  receivable  with
interest earned recognized on a cash basis only.  Securities  available for sale
are shown at amortized cost.

<TABLE>
<CAPTION>
                                                                          For the three months ended March 31,
                                                           ----------------------------------------------------------------------
                                                                           2000                               1999
                                                           ----------------------------------   ---------------------------------
                                                             Average                   Yield/   Average                   Yield/
                                                             Balance     Interest       Rate    Balance      Interest      Rate
                                                           ----------------------------------------------------------------------
                                                                                 (Dollars in Thousands)
<S>                                                         <C>           <C>           <C>     <C>            <C>         <C>
INTEREST EARNING ASSETS:
      Total loans                                           $597,188      $11,386       7.63%   $489,652       $9,483      7.75%
      Loans held for sale                                      2,104           41       7.79%      5,766          106      7.35%
      Investment securities held to maturity                   2,464           49       7.95%      2,801           56      8.00%
      Securities available for sale:
            Taxable                                          125,036        1,982       6.34%    126,620        1,636      5.17%
            Tax-exempt                                        72,333        1,110       6.14%     54,535          784      5.75%
                                                             -------        -----                 ------          ---
                Total securities available for sale          197,369        3,092       6.27%    181,155        2,420      5.34%
      Federal funds sold and other short term investments     12,510          184       5.88%     43,144          527      4.89%
                                                             -------        -----                 ------          ---

                Total earning assets                         811,635       14,752       7.27%    722,518       12,592      6.97%

INTEREST BEARING LIABILITIES:
   Deposits:
      NOW and Super NOW accounts                              87,393          475       2.17%     80,178          441      2.20%
      Money market deposit accounts                           18,360          138       3.01%     18,347          136      2.97%
      Savings accounts                                       187,119        1,321       2.82%    199,688        1,396      2.80%
      Time deposits accounts                                 216,902        2,616       4.82%    250,353        3,133      5.01%
      Conversion funds in escrow                                  --           --         --      36,272          253      2.79%
      Escrow accounts                                          2,277            9       1.58%      2,198            9      1.64%
                                                             -------        -----                 ------          ---
                Total interest-bearing deposits              512,051        4,559       3.56%    587,036        5,368      3.66%
   Borrowings:
      Securities sold under agreements to repurchase          47,797          699       5.85%      3,220           26      3.23%
      Short-term borrowings                                   21,526          314       5.83%      5,904           69      4.67%
      Long term-debt                                          47,071          684       5.81%     44,759          645      5.76%
                                                             -------        -----                 ------          ---
                Total borrowings                             116,394        1,697       5.83%     53,883          740      5.49%
                                                             -------        -----                 ------          ---

                Total interest-bearing liabilities           628,445        6,256       3.98%    640,919        6,108      3.81%

       Net interest spread                                                              3.29%                              3.16%

       Net interest income / net interest margin                            8,496       4.19%                   6,484      3.59%
                                                                            =====                               =====

       Ratio of interest earning assets to
         interest bearing liabilities                                                  129.15%                           112.73%

       Tax equivalent adjustment                                              412                                 297
                                                                              ---                                 ---

       Net interest income as per consolidated
         financial statements                                              $8,084                              $6,187
                                                                           ======                              ======
</TABLE>


COMPARISON  OF  OPERATING  RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND
1999

GENERAL

For the three months ended March 31,  2000,  the Company  recorded net income of
$2.1  million,  an  increase  of $4.4  million as compared to a net loss of $2.3
million for the three  month  period  ended March 31,  1999.  The  increase  was
principally  the result of higher  net  interest  income and lower  non-interest
expense,  as a result of the $4.1 million stock contribution to The Troy Savings
Bank Community  Foundation  made in the quarter ended March 31, 1999,  which was
partially offset by lower non-interest income and higher income tax expense. The
Company's diluted earnings per share were $0.21 for the three months ended March
31, 2000.

Annualized  return on average  assets for the three  months ended March 31, 2000
and 1999,  was 0.97% and (1.24%),  respectively,  and the  Company's  annualized
return on average equity was 4.89% and (12.90%), respectively.


                                       10
<PAGE>

NET INTEREST INCOME

Net interest  income on a tax equivalent  basis for the three months ended March
31, 2000, was $8.5 million, an increase of $2.0 million, or 31.0%, when compared
to  the  three  months  ended  March  31,  1999.   The  increase  was  primarily
attributable  to an $89.1 million  increase in average  interest  earning assets
(funded primarily by the net proceeds from the Company's initial public offering
on March 31, 1999) offset  partially  by the $12.5  million  decrease in average
interest  bearing   liabilities.   The  decrease  in  average  interest  bearing
liabilities  was the result of a decrease in average  deposits of $75.0 million,
primarily the result of a $33.5  million  decrease in time deposit  accounts,  a
$12.6  million  decrease in savings  accounts  and a $36.3  million  decrease in
conversion funds held in escrow,  partially offset by a $7.4 million increase in
interest-bearing  checking  and a $62.5  million  increase  in  borrowings.  Net
interest income was also  positively  affected by the 30 basis point increase in
the yield on average earning assets,  which was partially offset by the 17 basis
point increase in the average cost of funds.

Interest and dividend income for the three months ended March 31, 2000 was $14.8
million on a tax equivalent  basis, an increase of $2.2 million,  or 17.2%, over
the prior year. The increase was  principally  due to the increase in the volume
of earning assets as well as the 30 basis point increase in the average yield on
interest earning assets.

The average  yield on taxable  available  for sale  securities  increased by 117
basis points for the three  months  ended March 31,  2000,  compared to the same
period in 1999,  which more than  offset the $1.6  million  decrease  in average
balance of taxable  available for sale  securities.  The Company has invested on
average for the quarter  ended March 31, 2000,  approximately  $43.7  million in
short-term  government  agency discount bonds to preserve certain tax advantages
while providing liquidity comparable to federal funds and still offering a yield
comparable to the 5.88%  average yield for federal funds sold.  The average loan
yield for the three months ended March 31, 2000 was 7.63%,  down 12 basis points
from the same period in the  previous  year,  but was 136 basis points more than
the 6.27% average yield on available for sale  securities.  The Company has also
invested in tax-exempt municipal securities, primarily maturing within one year.
The average tax equivalent  yield on these securities for the three months ended
March 31,  2000 was 6.14%,  39 basis  points  higher than the yield for the same
period in 1999,  and 26 basis  points  higher than the average  yield on federal
funds sold and other short-term investments for the three months ended March 31,
2000.

Interest expense for the three months ended March 31, 2000, was $6.3 million, an
increase of $148,000,  or 2.4% over the three month period ended March 31, 1999.
The change was  principally due to a 17 basis point increase in the average cost
of funds  which  was  partially


                                       11
<PAGE>

offset by the decrease in average volume of interest  bearing  liabilities.  The
average balance of interest bearing liabilities was $628.4 million for the three
months  ended March 31,  2000, a decrease of $12.5  million,  or 1.9%,  from the
prior year's comparable  period.  This decrease was primarily  attributable to a
decrease  in  deposits  of $75.0  million,  principally  due to a $33.5  million
decrease in time deposit accounts,  a $12.6 million decrease in savings accounts
and a $36.3  million  decrease  in  conversion  funds held in escrow,  partially
offset by a $7.2  million  increase  in  interest-bearing  checking  and a $62.5
million  increase in  borrowings.  The average  balance of FHLB  borrowings  was
$111.8  million for the three months ended March 31, 2000,  as compared to $50.7
million in the  comparable  three  month  period  last  year.  The  increase  in
short-term  FHLB advances  partially  offset the $33.5  million  decline in time
deposit  accounts,  which the Company  experienced  as a result of time  deposit
rates  offered  at  slightly  lower  rates  than  other  financial  institutions
operating in the Company's primary market area.

The Company's net interest margin was 4.19% for the three months ended March 31,
2000,  compared  to 3.59% for the  comparable  three month  period.  The primary
factor was an $89.1 million increase in average earning assets, due primarily to
the Company's  initial public offering as well as the 30 basis point increase in
the  average  yield on earning  assets,  partially  offset by the 17 basis point
increase in cost of funds. The increase in cost of funds was principally  caused
by the increase in volume of average  borrowings and the increase in the average
rates paid on the borrowings,  partially offset by the decrease in the volume of
average  deposits and the decrease in rates paid on time deposit  accounts.  The
increase in the yield on interest earning assets was caused by the investment of
a substantial  portion of the offering proceeds in loans,  primarily  commercial
real estate and commercial business loans, with higher yields than securities or
federal funds and other short term investments.

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

PROVISION FOR LOAN LOSSES

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

The  provision for loan losses was $538,000 for the three months ended March 31,
2000, a decrease of $274,000,  or 33.7%,  from the provision of $812,000 for the
comparable  period of the prior year.  The  allowance  for loan losses was $11.3
million,  or 1.90% of period end loans at March 31,  2000,  as compared to $10.8
million,  or 1.90% of period end loans at September 30, 1999.  The allowance for
loan losses as a  percentage  of  non-performing  loans was 203.40% at March 31,
2000 as compared to 136.55% at  September  30, 1999.  Non-performing  loans were


                                       12
<PAGE>

$5.6  million,  or 0.93% of total  loans at March  31,  2000,  compared  to $7.9
million,  or 1.39% of total loans at September  30, 1999.  Net loan  charge-offs
increased  $631,000 for the six month period ended March 31, 2000 as compared to
same period in 1999.  However,  the provision for loan losses was reduced in the
quarter  ended  March  31,  2000  as a  result  of a  $3.1  million  decline  in
non-performing loans, or 35.7%, as compared to the quarter ended March 31, 1999.
Non-performing  loans  currently  represent 0.93% of total loans as of March 31,
2000, down from 1.39% at September 30, 1999, and 1.74% at March 31, 1999.

Commercial  real estate loans and commercial  business loans  represent 51.7% of
the total loan  portfolio at March 31, 2000  compared to 49.9% at September  30,
1999.

NON-INTEREST INCOME

Non-interest  income was  $675,000  for the three months ended March 31, 2000, a
decrease of $171,000,  or 20.2% from the three months ended March 31, 1999.  The
decrease was principally due to the $246,000 decrease in net gains from mortgage
loan sales as the volume of loans originated for sale has declined significantly
in the quarter  ended March 31, 2000, as compared to the same period in 1999, as
well as a slight  decline in trust  service  fees.  The decrease  was  partially
offset by a $38,000 increase in service charges on deposit accounts,  an $18,000
increase in loan  servicing  fees as the balance of loans serviced has increased
from the prior year,  and a $36,000  increase  in other  income as the result of
fees received by the Bank's insurance subsidiary.

NON-INTEREST EXPENSE

Non-interest expense for the three months ended March 31, 2000 was $5.4 million,
a decrease of $5.0 million, or 48.2%, from the same period in 1999. The decrease
was principally due to the $4.1 million stock  contribution  made in the quarter
ended March 31, 1999 to The Troy Savings Bank  Community  Foundation.  Personnel
expense  increased by $542,000  during the three months ended March 31, 2000, as
compared  to the prior year due to the  additional  costs in the 2000 period for
the ESOP  and the  restricted  stock  awards.  Professional  fees  decreased  by
$172,000,  or  36.2%  for the  three  months  ended  March  31,  2000,  over the
comparable  period of the prior year,  primarily  due to costs of  $189,000  for
consulting  fees  incurred  in the  three  months  ended  March  31,  1999,  for
establishing a profitability  measurement  system,  Y2K technology  evaluations,
administrative  costs for the ESOP and 401K plans, and  administrative  costs to
establish a Small Business Investment  Company.  Other real estate owned expense
decreased  $493,000,  or 89.2%,  for the three months  ended March 31, 2000,  as
compared to the same period in 1999. The decrease in expense was principally due
to a write-down  in value of a foreclosed  commercial  real estate  property and
costs  related to payment of taxes on other real estate owned which  occurred in
the quarter ended March 31, 1999 and were not repeated in the three months ended
March 31, 2000.  Other expense  decreased by $714,000,  or 54.5%,  for the three
months  ended March 31,  2000,  as compared to the three  months ended March 31,
1999. This decrease was primarily  attributable  to a $382,000  expense for Year
2000  remediation  efforts  in the  1999  period,  as well as the  write-off  of
overdraft escrow accounts and costs related to a direct mail loan program.


                                       13
<PAGE>

INCOME TAX EXPENSE

Income tax expense for the three months ended March 31, 2000,  was $752,000,  as
compared to an income tax benefit of $1.8 million for the  comparable  period in
1999. The increase was primarily  caused by the $7.0 million  increase in income
before taxes for the three months ended March 31, 2000,  as compared to the same
period in the prior year.  The  difference  in income  before taxes is primarily
related  to the  $4.1  million  stock  contribution  to The  Troy  Savings  Bank
Community Foundation made in the quarter ended March 31, 1999.

TABLE #2 AVERAGE BALANCE, INTEREST, YIELD AND RATE

The following table presents, for the periods indicated, the total dollar amount
of interest  income  from  average  interest  earning  assets and the  resultant
yields, as well as the interest expense on average interest bearing liabilities,
expressed  both in  dollars  and rates.  Tax  equivalent  adjustments  reflected
principally  on municipal  securities  and  commercial  business  loans  totaled
$811,000 in the six month  period  ended March 31,  2000,  and  $544,000 for the
comparable six month period.  All average  balances are daily average  balances.
Non-accruing  loans have been  included  in the table as loans  receivable  with
interest earned recognized on a cash basis only.  Securities  available for sale
are shown at amortized cost.

<TABLE>
<CAPTION>
                                                                             For the six months ended March 31,
                                                              ------------------------------------------------------------------
                                                                              2000                            1999
                                                              ---------------------------------  -------------------------------
                                                                Average                 Yield/    Average                Yield/
                                                                Balance     Interest     Rate     Balance    Interest     Rate
                                                              ------------------------------------------------------------------
                                                                                    (Dollars in Thousands)
<S>                                                            <C>          <C>          <C>     <C>          <C>         <C>
INTEREST EARNING ASSETS:
         Total loans                                           $586,524     $22,643      7.72%   $483,520     $18,937     7.83%
         Loans held for sale                                      2,517          98      7.79%      6,766         270     7.98%
         Investment securities held to maturity                   2,487          99      7.96%      3,026         118     7.80%
         Securities available for sale:
            Taxable                                             122,466       3,852      6.29%    132,121       3,468     5.25%
            Tax-exempt                                           71,111       2,148      6.04%     53,219       1,543     5.80%
                                                                -------       -----               -------       -----
               Total securities available for sale              193,577       6,000      6.20%    185,340       5,011     5.41%
         Federal funds sold and other short term investments     12,426         355      5.71%     26,754         670     5.01%
                                                                -------       -----               -------       -----

               Total earning assets                             797,531      29,195      7.32%    705,406      25,006     7.09%

INTEREST BEARING LIABILITIES:
     Deposits:
         NOW and Super NOW accounts                              86,542         952      2.20%     79,152         870     2.20%
         Money market deposit accounts                           18,812         284      3.02%     17,925         270     3.01%
         Savings accounts                                       187,670       2,664      2.84%    198,388       2,861     2.88%
         Time deposits accounts                                 220,361       5,293      4.80%    252,339       6,543     5.19%
         Conversion funds in escrow                                  --          --        --      18,136         253     2.79%
         Escrow accounts                                          2,567          22      1.71%      2,479          20     1.61%
                                                                -------       -----               -------       -----
               Total interest-bearing deposits                  515,952       9,215      3.57%    568,419      10,817     3.81%
     Borrowings:
         Securities sold under agreements to repurchase          25,620         724      5.65%      3,888          69     3.55%
         Short-term borrowings                                   31,084         891      5.73%      5,312         127     4.78%
         Long term-debt                                          45,749       1,335      5.84%     44,673       1,295     5.80%
                                                                -------       -----               -------       -----
               Total borrowings                                 102,453       2,950      5.76%     53,873       1,491     5.54%
                                                                -------       -----               -------       -----

               Total interest-bearing liabilities               618,405      12,165      3.93%    622,292      12,308     3.96%

     Net interest spread                                                                 3.39%                            3.13%

     Net interest income / net interest margin                               17,030      4.27%                 12,698     3.60%
                                                                             ======                            ======

     Ratio of interest earning assets to
       interest bearing liabilities                                                    128.97%                          113.36%

     Tax equivalent adjustment                                                  811                              544
                                                                                ---                              ---

     Net interest income as per consolidated
        financial statements                                                $16,219                          $12,154
                                                                            =======                          =======
</TABLE>



COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED MARCH 31, 2000 AND 1999

GENERAL

For the six months ended March 31, 2000, the Company recorded net income of $3.9
million,  an increase of $5.6 million, as compared to a net loss of $1.6 million
for the six month period ended March 31, 1999. The increase was  principally the
result of higher net interest income, lower non-interest expense, as a result of
the  $4.1  million  stock  contribution  to  The  Troy  Savings  Bank  Community
Foundation  made in the quarter  ended March 31, 1999,  and higher  non-interest
income,  partially  offset by higher income tax expense.  The Company's  diluted
earnings per share were $0.38 for the six months ended March 31, 2000.

Annualized  return on average assets for the six months ended March 31, 2000 and
1999, was 0.93% and (0.45%),  respectively,  and the Company's annualized return
on average equity was 4.54% and (4.56%), respectively.

NET INTEREST INCOME

Net interest income on a tax equivalent basis for the six months ended March 31,
2000, was $17.0 million, an increase of $4.3 million, or 34.1%, when compared to
the six months ended March 31, 1999. The increase was primarily  attributable to
an $92.1 million increase in average


                                       14
<PAGE>

interest  earning assets funded primarily by the net proceeds from the Company's
initial public  offering on March 31, 1999,  offset slightly by the $3.9 million
decrease in average interest bearing liabilities.

The  decrease  in  average  interest  bearing  liabilities  was the  result of a
decrease in deposits of $52.5,  primarily the result of a $32.0 million decrease
in time deposit  accounts,  a $10.7 million  decrease in savings  accounts and a
$18.1 million decrease in subscription funds held in escrow, partially offset by
an $7.4  million  increase in  interest-bearing  checking,  and a $48.6  million
increase in borrowings.  Net interest income was also positively affected by the
23 basis point  increase in the yield on average  earning assets and the 3 basis
point decrease in the average cost of funds.

Interest and  dividend  income for the six months ended March 31, 2000 was $29.2
million on a tax equivalent  basis, an increase of $4.2 million,  or 16.8%, over
the prior year. The increase was  principally  due to the increase in the volume
of earning assets as well as the 23 basis point increase in the average yield on
interest earning assets.

The average  yield on taxable  available  for sale  securities  increased by 104
basis  points for the six months  ended  March 31,  2000,  compared  to the same
period in 1999,  which more than  offset the $9.7  million  decrease  in average
balance of taxable  available for sale  securities.  The Company has invested on
average for the six months ended March 31, 2000,  approximately $52.8 million in
short-term  government  agency discount bonds to preserve certain tax advantages
while providing liquidity comparable to federal funds and still offering a yield
slightly higher than the 5.71% average yield for federal funds sold. The average
loan  yield for the six months  ended  March 31,  2000 was 7.72%,  down 11 basis
points from the same period in the previous  year, but was 152 basis points more
than the 6.20% average yield on available for sale  securities.  The Company has
also invested in tax-exempt municipal securities,  primarily maturing within one
year.  The average tax equivalent  yield on these  securities for the six months
ended March 31, 2000 was 6.04%,  24 basis  points  higher than the yield for the
same  period in 1999,  and 33 basis  points  higher  than the  average  yield on
federal  funds sold and other  short-term  investments  for the six months ended
March 31, 2000.

Interest expense for the six months ended March 31, 2000, was $12.2 million,  an
decrease of  $143,000,  or 1.2% over the six month  period ended March 31, 1999.
The change was  principally  due to a 3 basis point decrease in the average cost
of funds and the decrease in average volume of interest bearing liabilities. The
average balance of interest  bearing  liabilities was $618.4 million for the six
months  ended March 31, 2000, a decrease of $3.9  million,  or 0.62%,  primarily
attributable  to a decrease  in deposits  of $52.5,  principally  due to a $32.0
million decrease in time deposit  accounts,  a $10.7 million decrease in savings
accounts and an $18.1  million  decrease in  subscription  funds held in escrow,
partially offset by a $7.4 million increase in  interest-bearing  checking and a
$48.6 million increase in borrowings. The average balance of FHLB borrowings was
$98.6  million  for the six months  ended March 31,  2000,  as compared to $50.0
million in the


                                       15
<PAGE>

comparable six month period.  The increase in short-term FHLB advances more than
offset the $32.0  million  decline in time deposit  accounts,  which the Company
experienced  as a result of time deposit rates  offered at slightly  lower rates
than other  financial  institutions  operating in the Company's  primary  market
area.

The Company's  net interest  margin was 4.27% for the six months ended March 31,
2000,  compared to 3.60% for the comparable six month period. The primary factor
was a $92.1 million  increase in average  earning  assets,  due primarily to the
Company's initial public offering, as well as the 23 basis point increase in the
average yield on earning  assets and the 3 basis point  decrease in average cost
of funds.  The decrease in average cost of funds was  principally  caused by the
decrease  in the volume of average  deposits  and the  decrease in rates paid on
time  deposit  accounts,  partially  offset by the increase in volume of average
borrowings  and the increase in the average  rates paid on the  borrowings.  The
increase in the yield on interest earning assets was caused by the investment of
a substantial  portion of the offering proceeds in loans,  primarily  commercial
real estate and commercial business loans, with higher yields than securities or
federal funds and other short term investments.

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

PROVISION FOR LOAN LOSSES

The  provision  for loan losses was $1.3  million for the six months ended March
31,  2000, a decrease of $287,000,  or 17.7% from the  comparable  period of the
prior year.  Net loan  charge-offs  increased  $631,000 for the six month period
ended March 31, 2000 as compared to same period in 1999. However,  the provision
for loan losses was reduced in the six months ended March 31, 2000, primarily as
a result of a $2.3  million,  or 29.5%,  decline  in  non-performing  loans from
September 30, 1999 to March 31, 2000.  Non-performing  loans currently represent
0.93% of total  loans as of March 31,  2000,  down from 1.39% at  September  30,
1999.

NON-INTEREST INCOME

Non-interest  income was $1.8 million for the six months ended March 31, 2000, a
increase of $357,000,  or 24.3% from the six months  ended March 31,  1999.  The
increase was  principally  due to the receipt of a $382,000  award from the U.S.
Government  as a result of  originating  commercial  real  estate  loans,  which
qualified under the U.S.  Treasury's Bank Enterprise  Award program,  as well as
increases in trust  service fees and service  charges on deposit  accounts.  The
increase was partially offset by a $257,000  decrease in net gains from mortgage
loan  sales due to the  substantially  lower  volume in the 2000  period.  Trust
service  fees were up  $34,000,  or 11.1%,  as a result of a higher  balance  of
assets managed than in the comparable period of the prior year.  Service charges
on deposit  accounts were up $69,000,  or 15.6%,  compared to the same period of
the prior year.


                                       16
<PAGE>

NON-INTEREST EXPENSE

Non-interest  expense for the six months ended March 31, 2000 was $11.3 million,
a decrease of $4.0 million, or 26.0%, from the same period in 1999. The decrease
was principally due to the $4.1 million stock  contribution  made in the quarter
ended March 31, 1999 to The Troy Savings Bank  Community  Foundation.  Personnel
expense  increased by $898,000  during the six months  ended March 31, 2000,  as
compared  to the prior year due to the  additional  costs in the 2000 period for
the ESOP  and the  restricted  stock  awards.  Professional  fees  increased  by
$56,000,  or 8.5%, for the six months ended March 31, 2000,  over the comparable
period  of the  prior  year,  primarily  due an  increase  in costs  related  to
operating as a stock form organization, partially offset by costs for consulting
fees  for  establishing  a  profitability  measurement  system,  Y2K  technology
evaluations,   administrative   costs   for  the  ESOP  and  401K   plans,   and
administrative costs to establish the Small Business Investment Company incurred
in the six  months  ended  March 31,  1999.  Other  real  estate  owned  expense
decreased  $456,000,  or 73.7%,  for the six months  ended  March 31,  2000,  as
compared to the same period in 1999. The decrease in expense was principally due
to a write-down  in value of a foreclosed  commercial  real estate  property and
costs  related to payment of taxes on other real estate owned which  occurred in
the six months ended March 31, 1999.  Other  expense  decreased by $396,000,  or
21.1%,  for the six months ended March 31,  2000,  as compared to the six months
ended March 31, 1999.  This  decrease was primarily  attributable  to a $382,000
expense for Year 2000  remediation  efforts in the 1999  period,  as well as the
write-off of overdraft escrow accounts,  and costs related to a direct mail loan
program in the six months  ended March 31, 1999,  partially  offset by increased
costs in the same  period  of 2000 for cash  reserves  maintained  for Year 2000
liquidity  purposes,  advertising  and marketing costs related to the opening of
the Wynantskill  branch,  deferred  compensation costs for directors,  and costs
associated with servicing loans.

INCOME TAX EXPENSE

Income tax expense for the six months ended March 31, 2000,  was $1.5 million as
compared to an income tax benefit of $1.6 million for the  comparable  period in
1999. The increase was primarily  caused by the $8.7 million  increase in income
before taxes for the six months  ended March 31,  2000,  as compared to the same
period in the prior year.  The  difference  in income  before taxes is primarily
related  to the  $4.1  million  stock  contribution  to The  Troy  Savings  Bank
Community  Foundation  made  during the six months  ended March 31, 1999 and the
increase in net interest income.

LIQUIDITY AND CAPITAL RESOURCES

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


                                       17
<PAGE>

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

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

Consistent  with  its  goals  to  operate  a  sound  and  profitable   financial
organization,  the  Company  actively  seeks to  maintain  a "well  capitalized"
institution in accordance  with regulatory  standards.  As of March 31, 2000 and
September  30,  1999,  total  equity was  $170.5  million  and  $180.4  million,
respectively,  or 18.7% and 19.7% of total assets at those respective dates. The
reduction  in the  equity  to  assets  ratio is  consistent  with the  Company's
strategy to manage its capital  through  asset  growth,  dividend  payments,  as
reflected by the $.05 per share cash  dividend  paid during each of the quarters
ended  December  31,  1999 and March  31,  2000,  as well as a share  repurchase
program.  The Company has repurchased  1,092,511  shares of common stock, or all
9.0% of the first approved  stock  repurchase  program,  in the six month period
ended March 31, 2000. The Company utilized 446,165 of these shares for awards of
restricted  stock under the Company's  Long-Term  Equity  Compensation  Plan. In
addition,  87,900  shares  were  purchased  by the  Company  through a  deferred
compensation  plan  maintained for directors.  The cost basis of these shares is
included in treasury stock.

The  following  is a summary  of the  Company's  and the Bank's  actual  capital
amounts  and ratios at March 31,  2000,  compared  to the FDIC  minimum  capital
requirements:

<TABLE>
<CAPTION>
                                               Actual                                Ratio requirements
                                 ---------------------------------------------------------------------------------------
                                                                            Minimum               Classification
                                                                            Capital                   as Well
                                     Amount               %                 Adaquecy                Capitalized
                                     ------               -                 --------                -----------
                                                                 (DOLLARS IN THOUSANDS)
<S>                                     <C>                   <C>                      <C>                        <C>
Leverage (Tier I) Capital:
   Bank                                 $126,155              14.74%                   4.00%                      5.00%
   Consolidated                         $171,218              20.01%                   4.00%                      5.00%
Tier 1 Risk-based Capital:
   Bank                                 $126,155              18.90%                   4.00%                      6.00%
   Consolidated                         $171,218              26.10%                   4.00%                      6.00%
Total Risk-Based Capital:
   Bank                                  134,498              20.15%                   8.00%                     10.00%
   Consolidated                          179,419              27.35%                   8.00%                     10.00%
</TABLE>


FORWARD-LOOKING STATEMENTS

When used in this Form 10-Q or other filings by the Company with the  Securities
and Exchange  Commission,  in the  Company's  press  releases or other public or
shareholder  communications,  or in oral statements made with the approval of an
authorized  executive officer,  the words or phrases "will likely result",  "are
expected  to",  "will  continue",  "is  anticipated",   "estimate",   "project",
"believe",  or similar  expressions  are  intended to identify  "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995. In addition, certain


                                       18
<PAGE>

disclosures and information customarily provided by financial institutions, such
as analysis of the adequacy of the  allowance  for loan losses or an analysis of
the interest rate  sensitivity  of the  Company's  assets and  liabilities,  are
inherently   based  upon   predictions  of  future  events  and   circumstances.
Furthermore,  from time to time,  the Company may publish other  forward-looking
statements  relating  to such  matters  as  anticipated  financial  performance,
business prospects, and similar matters.

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

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

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

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

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

o        changes in competition; and

o        changes in consumer preferences.

The  Company  wishes to  caution  readers  not to place  undue  reliance  on any
forward-looking statements,  which speak only as of the date made, and to advise
readers that various factors,  including those described above, could affect the
Company's financial  performance and could cause the Company's actual results or
circumstances  for future periods to differ materially from those anticipated or
projected.

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

ITEM 3:  Quantitative and Qualitative Disclosures About Market Risk

Interest rate risk is the most  significant  market risk  affecting the Company.
Other types of


                                       19
<PAGE>

market risk, such as foreign exchange rate risk and commodity price risk, do not
arise in the normal course of the Company's business activities.

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

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

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

In order to reduce the  interest  rate risk  associated  with the  portfolio  of
conventional  mortgage  loans  held  for  sale,  as  well  as  outstanding  loan
commitments and uncommitted  loan  applications  with rate lock agreements which
are intended to be held for sale,  the Company  enters into  agreements  to sell
loans in the secondary  market to unrelated  investors on a loan-by-loan  basis,
and may also  enter  into  option  agreements.  There  have been no  significant
changes in the Company's interest rate sensitivity since September 30, 1999.


                                       20
<PAGE>


PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

                  None

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS

                  None

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

                  None

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

         The Company  held an annual  meeting of  shareholders  on February  10,
2000. At the meeting a proposal to elect Directors Daniel J. Hogarty, Jr.,Willie
A.  Hammett,  and Thomas B. Healy for three year terms was  approved.  The votes
cast for this  proposal  and the  number  of  abstentions  with  respect  to the
proposal, were as follows:

         Election of Directors:

                                    For              Abstentions

Daniel J. Hogarty, Jr.              10,367,732       184,789

Willie A. Hammett                   10,375,918       176,603

Thomas B. Healy                     10,375,320       177,201

ITEM 5 - OTHER INFORMATION

                  None

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

                   (a)     Exhibits.

                           27. Financial Data Schedule

                   (b)     Reports on 8-K.

                           There was one  report on Form 8-K  filed  during  the
                           quarter ended March 31, 2000:

                           On  February  29,  2000  Troy  Financial  Corporation
                           reported  that  it  had  announced  a  press  release
                           regarding a stock  repurchase  program.  No financial
                           reports were filed.


                                       II-1
<PAGE>

                                   SIGNATURES

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

                                      TROY FINANCIAL CORPORATION
                                             (Registrant)

Date:    May 15, 2000                 /s/ Daniel J. Hogarty, Jr.
                                      --------------------------
                                      Daniel J. Hogarty, Jr.
                                      Chairman of the Board, President and
                                        Chief Executive Officer

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


                                      II-2