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



                                    FORM 10-K

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

      For the fiscal year ended September 30, 1999

                                            OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                         Commission file number 0-27716

                          YONKERS FINANCIAL CORPORATION
-------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

               Delaware                                13-3870836
-------------------------------------------------------------------------------
      (State or other jurisdiction of                (I.R.S. Employer
       incorporation or organization)                Identification No.)

  6 Executive Plaza, Yonkers, New York                    10701
-------------------------------------------------------------------------------
(Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code: (914) 965-2500

           Securities Registered Pursuant to Section 12(b) of the Act:
-------------------------------------------------------------------------------
                                      None

           Securities Registered Pursuant to Section 12(g) of the Act:

                     Common Stock, par value $0.01 per share
-------------------------------------------------------------------------------
                                (Title of Class)

      Indicate  by check  mark  whether  the  Registrant  (1) filed all  reports
required to be filed by Section 13 or 15(d) of the  Exchange Act during the past
twelve months (or for such shorter  period that the  Registrant  was required to
file such reports),  and (2) has been subject to such  requirements for the past
90 days. YES [X] NO [ ]

      Indicate by check mark if there is no disclosure  of delinquent  filers in
response to Item 405 of Regulation S-K contained in this form, and no disclosure
will be contained, to the best of Registrant's knowledge, in definitive proxy or
information  statements  incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]

      As of  December  15,  1999,  there were issued and  outstanding  2,238,739
shares of the  Registrant's  Common  Stock.  The  aggregate  market value of the
voting stock held by non-affiliates of the Registrant,  computed by reference to
the closing price of such stock on the Nasdaq National Market as of December 15,
1999, was  approximately  $34.1 million.  (The exclusion from such amount of the
market  value of the shares owned by any person shall not be deemed an admission
by the Registrant that such person is an affiliate of the Issuer.)

                       DOCUMENTS INCORPORATED BY REFERENCE

PARTS II and IV of Form 10-K--Annual  Report to Stockholders for the fiscal year
ended September 30, 1999. PART III of Form 10-K--Proxy  Statement for the Annual
Meeting of Stockholders for the fiscal year ended September 30, 1999.

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

<PAGE>


                          YONKERS FINANCIAL CORPORATION

                           ANNUAL REPORT ON FORM 10-K
                               SEPTEMBER 30, 1999

                                TABLE OF CONTENTS


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

                PART I                                                    PAGE

Item 1          Business...............................................   3

Item 2          Properties.............................................   40

Item 3          Legal Proceedings......................................   42

Item 4          Submission of Matters to a Vote of Security Holders....   42

                PART II

Item 5          Market for Registrant's Common Equity and Related
                Stockholder Matters....................................   42

Item 6          Selected Financial Data................................   42

Item 7          Management's Discussion and Analysis of Financial
                   Condition and Results of Operations.................   42

Item 7A         Quantitative and Qualitative Disclosures About Market     42
                Risk...................................................

Item 8          Financial Statements and Supplementary Data............   42

Item 9          Changes in and Disagreements with Accountants on
                   Accounting and Financial Disclosure.................   43

                PART III

Item 10         Director, and Executive Officers of the Registrant.....   43

Item 11         Executive Compensation.................................   44

Item 12         Security Ownership of Certain Beneficial Owners
                   and Management......................................   44

Item 13         Certain Relationships and Related Transactions.........   44

                PART IV

Item 14         Exhibits, Financial Statement Schedules and Reports on
                   Form 8-K............................................   45

                Signatures.............................................   47

                                       2

<PAGE>


                                    PART I


ITEM 1.   BUSINESS

GENERAL

      Yonkers  Financial  Corporation (the "Holding  Company") was formed at the
direction of The Yonkers Savings and Loan Association,  FA ("Yonkers Savings" or
the  "Association")  in  December  1995 for the  purpose  of  owning  all of the
outstanding stock of the Association issued in the Association's conversion from
the mutual to stock form of organization (the "Conversion").  The Conversion was
completed on April 18, 1996. Concurrent with the Conversion, the Holding Company
sold 3,570,750 shares of its common stock for net proceeds of $34.6 million. The
Holding Company and the Association are  collectively  referred to herein as the
"Company."

      The  Holding  Company  is  incorporated  under  the  laws of the  State of
Delaware  (and  qualified to do business in the State of New York) and generally
is  authorized  to engage in any  activity  that is  permitted  by the  Delaware
General  Corporation  Law.  The  principal  asset of the Holding  Company is its
investment in the stock of the Association, although it also holds certain other
investments  and a loan to its Employee Stock  Ownership Plan (the "ESOP").  The
Association has two wholly owned subsidiaries, Yonkers REIT, Inc., a real estate
investment  trust.  (the  "REIT")  and  Yonkers  Financial  Services,   Inc.,  a
subsidiary that sells savings bank life insurance and annuities.

      As a community-oriented  financial  institution,  the Association offers a
variety of  financial  services to meet the needs of  communities  in its market
area. The  Association  attracts  deposits from the general public and uses such
deposits,  together with borrowings,  to originate primarily one- to four-family
residential  mortgage  loans  (including  home equity lines of credit) and, to a
lesser  extent,   multi-family  and  commercial  real  estate,  consumer,  land,
construction and commercial  business loans in the Association's  primary market
area.  The  Association  also invests in  mortgage-backed  and other  securities
permissible for a  federally-chartered  savings association.  As a member of the
Savings  Association  Insurance Fund ("SAIF") of the Federal  Deposit  Insurance
Corporation  ("FDIC"),  the Association's  deposits are insured up to applicable
limits.

      The executive offices  (corporate  headquarters) and lending center of the
Company are  located at 6  Executive  Plaza,  Yonkers,  New York 10701,  and its
telephone number at that address is (914) 965-2500.

                                       3

<PAGE>


MARKET AREA

      The  Company  conducts  its  banking  operations  through  its main office
located at One Manor  House  Square,  Yonkers,  New York and three  full-service
banking  offices  located in Yonkers,  New York. A branch  located in a discount
store in Wappingers  Falls,  Dutchess County,  was opened in December 1997 and a
second in-store  branch was opened in Yorktown  Heights,  Westchester  County in
October 1998. In May 1999, a third  in-store  branch was opened in a supermarket
in Mt.  Vernon,  Westchester  County and a fourth was opened in a supermarket in
Poughkeepsie, Dutchess County in September 1999. A corporate headquarters office
and lending  center is also  maintained  in  Yonkers,  New York.  The  Company's
primary  market area for deposits  includes the City of Yonkers and  surrounding
communities.  The  Company's  primary  market  area for its  lending  activities
consists of  communities  within  Westchester  County and  portions of Rockland,
Putnam and Dutchess Counties, New York.

      Yonkers is located in Westchester  County  approximately 10 miles north of
the  Borough  of  Manhattan  in New  York  City.  Yonkers  and  the  surrounding
communities   include  a  diverse   population   of  low-  and   moderate-income
neighborhoods  as well as middle  class  and more  affluent  neighborhoods.  The
housing  in the  low-  and  moderate-income  neighborhoods  consists  mainly  of
apartments while other areas consist primarily of single-family residences.  The
Company's  market area also includes  substantial  commercial  areas  containing
shopping  areas,  office and  medical  facilities  and  small-  and  medium-size
manufacturing and industrial facilities.

LENDING ACTIVITIES

      GENERAL. Historically, the Company originated 30-year, fixed-rate mortgage
loans secured by one- to four-family  residences.  Since the mid-1980s, in order
to reduce its  vulnerability  to changes in interest rates, the Company has also
originated  adjustable-rate  mortgage  ("ARM")  loans and home  equity  lines of
credit.  During  fiscal 1997,  the Company  began to offer a "15/1"  residential
mortgage  loan  product with a fixed rate for the first 15 years and annual rate
adjustments thereafter. Residential mortgage originations also currently include
products with initial fixed-rate periods of five, seven or ten years with annual
rate adjustments thereafter.  The Company engages in secondary market sales of a
portion of its residential mortgage originations,  as market conditions warrant.
Both originations and sales activity increased significantly in fiscal 1998. The
Company  also  offers   multi-family  and  commercial  real  estate,   consumer,
construction and land loans. During fiscal 1999 the Company expanded its lending
operations and increased originations of multi-family and commercial real estate
loans in order to enhance portfolio yield.

                                       4

<PAGE>


      The following table sets forth the  composition of the loan portfolio,  by
category,  in dollar  amounts and as a percentage of the total  portfolio at the
dates indicated.

<TABLE>
<CAPTION>

                                                                         At September 30,
                                      ----------------------------------------------------------------------------------
                                           1999               1998             1997            1996            1995
                                     ----------------- ----------------- --------------- --------------- ---------------
                                               Percent           Percent         Percent         Percent         Percent
                                      Amount  of Total  Amount  of Total Amount of Total Amount of Total Amount of Total
                                     -------- -------- -------- -------- ------ -------- ------ -------- ------ --------
                                                                       (Dollars in thousands)
<S>                                  <C>       <C>     <C>       <C>   <C>       <C>    <C>     <C>     <C>      <C>
Real Estate Mortgage Loans:
 One- to four-family (1)(2)(3)       $245,692   81.6%  $167,225  84.1% $111,821   79.0% $62,283  70.6%  $63,282   74.4%
 Multi-family                          16,264    5.4      7,846   3.9     5,658    4.0    5,471   6.2     5,647    6.6
 Commercial                            26,753    8.9     12,766   6.4    11,990    8.5    9,117  10.3     6,575    7.7
 Construction                           2,812    0.9      2,613   1.3     2,786    2.0    2,175   2.5     2,205    2.6
  Land                                  1,502    0.5        932   0.5     1,814    1.3    1,934   2.2     2,112    2.5
                                     --------  -----   -------- -----  --------  -----  ------- -----   -------  -----
    Total real estate mortgage loans $293,023   97.3    191,382  96.2   134,069   94.8   80,980  91.8    79,821   93.8
                                     --------  -----   -------- -----  --------  -----  ------- -----   -------  -----
Other Loans:
Consumer loans:
 Home equity                            4,574    1.5      3,678   1.9     3,217    2.3    2,911   3.3     2,389    2.8
 Personal                               1,483    0.5      1,447   0.7     1,666    1.1    1,632   1.8     1,734    2.0
 Other                                  1,117    0.4      1,224   0.6     1,237    0.9    1,310   1.5     1,092    1.3
                                     --------  -----   -------- -----  --------  -----  ------- -----   -------  -----
    Total consumer loans                7,174    2.4      6,349   3.2     6,120    4.3    5,853   6.6     5,215    6.1
Commercial business loans               1,080    0.3      1,195   0.6     1,299    0.9    1,413   1.6        56    0.1
                                     --------  -----   -------- -----  --------  -----  ------- -----   -------  -----
    Total other loans                   8,254    2.7      7,544   3.8     7,419    5.2    7,266   8.2     5,271    6.2
                                     --------  -----   -------- -----  --------  -----  ------- -----   -------  -----
    Total loans                       301,277  100.0%   198,926 100.0%  141,488  100.0%  88,246 100.0%   85,092  100.0%
                                               =====            =====            =====          =====            =====
Less:
  Construction loans in process        (1,672)             (743)         (1,091)           (171)           (293)
  Allowance for loan losses            (1,503)           (1,302)         (1,093)           (937)           (719)
  Deferred loan origination
    costs (fees), net                   1,074               478            (184)           (472)           (401)
                                     --------          --------        --------         -------         -------
    Total loans, net                 $299,176          $197,359        $139,120         $86,666         $83,679
                                     ========          ========        ========         =======         =======
</TABLE>

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

(1) Includes  advances  under home equity lines of credit of $3.2 million,  $4.6
    million,  $5.9 million,  $7.3 million,  and $9.1 million,  respectively,  at
    September 30, 1999, 1998, 1997, 1996 and 1995.
(2) Includes  cooperative  apartment loans of $3.7 million,  $4.5 million,  $4.8
    million, $5.5 million and $5.8 million, respectively, at September 30, 1999,
    1998, 1997, 1996 and 1995.
(3) Includes  loans  held for sale of $1.2  million  , $13.3  million  and $20.4
    million at September 30, 1999, 1998 and 1997, respectively.

                                       5

<PAGE>


The  following  table  sets  forth the  composition  of the loan  portfolio,  by
category and by type of interest rate (fixed or  adjustable),  in dollar amounts
and as a  percentage  of the total  portfolio  at the dates  indicated.

<TABLE>
<CAPTION>
                                                                   At September 30,
                                    -------------------------------------------------------------------------------
                                          1999           1998            1997            1996            1995
                                    --------------- --------------- --------------- --------------- ---------------
                                           Percent         Percent         Percent         Percent         Percent
                                    Amount of Total Amount of Total Amount of Total Amount of Total Amount of Total
                                    ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
                                                                Dollars in thousands)
<S>                                 <C>      <C>    <C>      <C>    <C>      <C>    <C>     <C>     <C>      <C>
Fixed-Rate Loans:
Real Estate Mortgage Loans:
 One- to four-family (1)(2)         $ 60,071  19.9% $ 46,838  23.5% $ 36,074  25.5% $11,805   13.4% $11,805   13.9%
 Multi-family                         10,320   3.4     1,529   0.8       108   0.1       47    0.1      715    0.8
 Commercial                           14,295   4.7     1,742   0.9        95   0.1      131    0.1      396    0.5
  Land                                   229   0.1       270   0.1       390   0.3       49    0.1       49    0.1
                                    -------- -----  -------- -----  -------- -----  -------  -----  -------  -----
   Total real estate mortgage loans   84,915  28.1    50,379  25.3    36,667  26.0   12,032   13.7   12,965   15.3
Consumer loans                         7,174   2.4     6,349   3.2     6,120   4.3    5,853    6.6    5,215    6.1
                                    -------- -----  -------- -----  -------- -----  -------  -----  -------  -----
   Total fixed-rate loans             92,089  30.5    56,728  28.5    42,787  30.3   17,885   20.3   18,180   21.4
                                    -------- -----  -------- -----  -------- -----  -------  -----  -------  -----
Adjustable-Rate Loans:
Real Estate Mortgage Loans:
 One- to four-family (3)(4)(5)       185,621  61.7   120,387  60.6    75,747  53.5   50,478   57.2   51,477   60.4
 Multi-family                          5,944   2.0     6,317   3.2     5,550   3.9    5,424    6.1    4,932    5.8
 Commercial                           12,458   4.1    11,024   5.5    11,895   8.4    8,986   10.2    6,179    7.3
 Construction                          2,812   0.9     2,613   1.3     2,786   2.0    2,175    2.5    2,205    2.6
  Land                                 1,273   0.4       662   0.3     1,424   1.0    1,885    2.1    2,063    2.4
                                    -------- -----  -------- -----  -------- -----  -------  -----  -------  -----
   Total real estate mortgage loans  208,108  69.1   141,003  70.9    97,402  68.8   68,948   78.1   66,856   78.5
                                    -------- -----  -------- -----  -------- -----  -------  -----  -------  -----
Commercial business loans              1,080   0.4     1,195   0.6     1,299   0.9    1,413    1.6       56    0.1
                                    -------- -----  -------- -----  -------- -----  -------  -----  -------  -----
   Total adjustable-rate loans       209,188  69.5   142,198  71.5    98,701  69.7   70,361   79.7   66,912   78.6
                                    -------- -----  -------- -----  -------- -----  -------  -----  -------  -----
Total loans                          301,277 100.0%  198,926 100.0%  141,488 100.0%  88,246  100.0%  85,092  100.0%
                                    -------- =====  -------- =====  -------- =====  -------  =====  -------  =====
Less:
 Construction loans in process        (1,672)           (743)         (1,091)          (171)           (293)
 Allowance for loan losses            (1,503)         (1,302)         (1,093)          (937)           (719)
 Deferred loan origination costs
     (fees), net                       1,074             478            (184)          (472)           (401)
                                    --------        --------        --------        -------         -------
   Total loans, net                 $299,176        $197,359        $139,120        $86,666         $83,679
                                    ========        ========        ========        =======         =======
</TABLE>

------------------------
(1) Includes  loans  held for sale of $1.2  million,  $13.3  million  and  $20.4
    million at September 30, 1999, 1998 and 1997, respectively.

(2) Fixed-rate  totals  include  loans with an initial  fixed-rate  period of 15
    years,  with annual rate  adjustments  thereafter,  totaling  $23.5 million,
    $14.0 million and $23.6 million,  respectively,  at September 30, 1999, 1998
    and 1997.

(3) Adjustable-rate  totals  include  loans with initial  fixed-rate  periods of
    five, seven or ten years, with annual rate adjustments thereafter,  totaling
    $157.0 million, $83.8 million, $35.7 million and $3.6 million, respectively,
    at September 30, 1999, 1998, 1997 and 1996.

(4) Includes  advances  under home equity lines of credit of $3.2 million,  $4.6
    million,  $5.9 million,  $7.3 million,  and $9.1 million,  respectively,  at
    September 30, 1999, 1998, 1997, 1996 and 1995.

(5) Includes  cooperative  apartment loans of $3.7 million,  $4.5 million,  $4.8
    million, $5.5 million and $5.8 million, respectively, at September 30, 1999,
    1998, 1997, 1996 and 1995.

                                       6

<PAGE>


         The  following  table  sets  forth  the  contractual  maturity  of  the
Company's  loan  portfolio at September 30, 1999.  The table reflects the entire
unpaid  principal  balance of a loan in the  maturity  period that  includes the
final payment date and, accordingly,  does not give effect to periodic principal
repayments or possible prepayments. Principal repayments and prepayments totaled
$38.5 million, $24.2 million and $13.6 million for the years ended September 30,
1999, 1998 and 1997, respectively.

<TABLE>
<CAPTION>
                                                                               At September 30, 1999
                                 ---------------------------------------------------------------------------------------------------
                                                                                                      Consumer and
                                  One-to-Four                  Commercial                              Commercial
                                   Family (1)   Multi-Family   Real Estate  Construction      Land      Business        Total
                                 -------------- ------------- ------------- ------------ ------------ ------------- ----------------
                                        Weighted      Weighted      Weighted     Weighted     Weighted      Weighted        Weighted
                                         Average       Average       Average      Average      Average       Average         Average
                                  Amount   Rate  Amount  Rate  Amount  Rate Amount  Rate Amount Rate  Amount  Rate   Amount   Rate
                                 -------- ----- ------- ----- ------- ----- ------ ----- ------ ----- ------ ------ -------- ------
<S>                              <C>      <C>   <C>     <C>   <C>     <C>   <C>    <C>   <C>    <C>   <C>    <C>    <C>      <C>

Contractual maturity:
 One year or less (2)            $  1,708 8.15% $   ---  ---% $     8 9.50% $2,040 9.35% $  755 9.20% $  303 12.83% $  4,814  9.12%
                                 --------       -------       -------       ------       ------       ------        --------
  After one year:
   More than 1 year to 2 years        531 9.64      249 9.08      ---  ---     772 9.75     469 8.18     358 11.32     2,379 10.04
   More than 2 year to 3 years        598 9.47      ---  ---    2,564 7.19     ---  ---     ---  ---     645 11.10     3,807 10.13
   More than 3 year to 5 years      3,061 8.37      ---  ---    1,535 7.44     ---  ---     ---  ---   1,578 10.09     6,174  9.97
   More than 5 year to 10 years     7,946 7.46    5,701 8.16    7,274 8.00     ---  ---     ---  ---   4,296  9.13    25,217  8.62
   More than 10 year to 20 years   32,322 7.18   10,025 8.32   14,349 7.86     ---  ---     278 9.69   1,074  8.53    58,048  7.76
   More than 20 years             199,526 6.98      289 8.00    1,023 8.26     ---  ---     ---  ---     ---   ---   200,838  7.21
                                 --------       -------       -------       ------       ------       ------        --------
     Total after one year         243,984 7.05   16,264 8.78   26,745 7.83     772 9.75     747 8.75   7,951  9.51   296,463  7.56
                                 --------       -------       -------       ------       ------       ------        --------
  Total amount due               $245,692 7.06% $16,264 8.78% $26,753 7.83% $2,812 9.46% $1,502 8.98% $8,254  9.63% $301,277  7.62%


</TABLE>

-----------------------------------
(1)  Includes  $3.2 million of advances  under home equity lines of credit which
     require minimum interest-only  payments for the first five to ten years the
     advance is  outstanding,  followed by a balloon  payment  thereafter.  Also
     includes  $1.2  million in loans held for sale on the basis of their  final
     contractual maturity (all more than 20 years).
(2)  Includes  demand  loans,  loans having no stated  maturity,  and  overdraft
     loans.

                                       7

<PAGE>


      The following table sets forth the dollar amounts in each loan category at
September 30, 1999 that are  contractually  due after  September  30, 2000,  and
whether such loans have fixed interest rates or adjustable interest rates.


                                                 Due After September 30, 2000
                                                 ----------------------------
                                                  Fixed   Adjustable   Total
                                                 ------- ----------- --------
                                                        (In thousands)
        Real estate mortgage loans:
          One- to four-family                    $59,864   $184,120  $243,984
          Multi-family                            10,319      5,945    16,264
          Commercial                              14,296     12,449    26,745
          Construction                               ---        772       772
          Land                                       229        518       747
                                                 -------   --------  --------
             Total real estate mortgage loans     84,708    203,804   288,512
        Consumer and commercial business loans     6,872      1,079     7,951
                                                 -------   --------  --------
             Total loans                         $91,580   $204,883  $296,463
                                                 =======   ========  ========


      Pursuant to Federal law, the aggregate amount of loans that the Company is
permitted  to make to any  one  borrower  or a group  of  related  borrowers  is
generally  limited to 15% of the  Association's  unimpaired  capital and surplus
(25% if the  security for such loan has a "readily  ascertainable"  value or 30%
for certain residential  development loans). At September 30, 1999, based on the
15% limitation, the Company's loans-to-one borrower limit was approximately $5.1
million.  On the same  date,  the  Company  had no  borrowers  with  outstanding
balances in excess of this amount.  As of September 30, 1999, the largest dollar
amount  outstanding  to one borrower,  or group of related  borrowers,  was $2.2
million secured by five apartment  buildings  located in Mt. Vernon and Yonkers,
New York; one four family residence located in Yonkers,  New York and one single
family residence  located in Eastchester,  New York . At September 30, 1999, the
Company's  next  largest loan  relationship  or group  outstanding  totaled $1.2
million secured by a 28-unit  apartment  building and a single family  residence
located in Yonkers,  New York.  These loans were  performing in accordance  with
their terms at September 30, 1999.

      The Company's lending is subject to its written underwriting standards and
to loan origination  procedures.  Decisions on loan applications are made on the
basis  of  detailed  applications  submitted  by the  prospective  borrower  and
property valuations (consistent with the Company's appraisal policy) prepared by
independent  appraisers.   The  loan  applications  are  designed  primarily  to
determine the borrower's ability to repay, and the more significant items on the
application are verified  through use of credit reports,  financial  statements,
tax returns and/or confirmations.

      Under the Company's loan policy, the individual  processing an application
is  responsible  for ensuring that all  documentation  is obtained  prior to the
submission of the application to a loan officer for approval.  In addition,  the
loan officer  verifies that the  application  meets the  Company's  underwriting
guidelines  described  below.  Also, each application file is reviewed to assure
its accuracy  and  completeness.  In 1997,  the Company  instituted  an enhanced
process  for quality  control  reviews of  residential  loan  originations.  The
quality control process includes reviews of underwriting  decisions,  appraisals

                                       8

<PAGE>

and documentation.  The Company is using the services of an independent  company
to perform the quality control reviews.

      The  Company's  lending  officers  have  approval  authority  for  one- to
four-family  residential loans and cooperative  apartment ("co-op") loans, up to
$350,000.  One- to  four-family  residential  loans over  $350,000  to  $500,000
require the approval of the Company's  President or its Vice President and Chief
Lending Officer. Co-op loans over $350,000 require the approval and/or review of
the Chief  Lending  Officer.  The Company's  Chief Lending  Officer has approval
authority for multi-family,  commercial real estate loans, and for land loans up
to  $500,000.  Loans in excess of these  amounts  require  the  approval  of the
Company's Loan Committee or Board of Directors.  Various  officers have approval
authority  ranging  from  $2,000 on  secured  consumer  loans,  up to $50,000 on
fixed-rate  home equity loans and up to $30,000 on  commercial  business  loans.
Approval authorities on unsecured consumer loans range from $2,000 to $10,000.

      Generally,  the Company  requires  title  insurance  or  abstracts  on its
mortgage  loans as well as fire and  extended  coverage  casualty  insurance  in
amounts  at least  equal to the  principal  amount  of the loan or the  value of
improvements  on the property,  depending on the type of loan.  The Company also
requires flood insurance to protect the property  securing its interest when the
property is located in a flood plain.

      ONE- TO FOUR-FAMILY  RESIDENTIAL  REAL ESTATE LENDING.  The cornerstone of
the Company's  lending  program is the origination of loans secured by mortgages
on owner-occupied one- to four-family residences.  At September 30, 1999, $245.7
million,  or 81.6%, of the Company's loan portfolio  consisted of mortgage loans
on one- to  four-family  residences  (including  $1.2  million of loans held for
sale,  $3.2  million  of  advances  under home  equity  lines of credit and $3.7
million of co-op loans).  Substantially  all of the residential loans originated
by the  Company  are  secured by  properties  located in the  Company's  primary
lending  area. A majority of the mortgage  loans  originated  by the Company are
generally  retained and serviced by it,  although a portion of its  originations
were sold in the secondary  market (with servicing  retained) in fiscal 1999. At
September  30,  1999,  approximately  $6.8  million  of the  Company's  one-  to
four-family  residential  real estate loans were  secured by non-owner  occupied
properties.  At that date, the average outstanding  residential loan balance was
approximately $204,000, compared to $163,000 at September 30, 1998. The increase
in the average outstanding  residential loan balance reflects the origination of
loans with larger loan balances.

      Since the  mid-1980s,  the  Company  has offered ARM loans at rates and on
terms determined in accordance with market and competitive  factors. The Company
offers  one-year  ARMs for  terms of up to 30 years at a margin  (generally  275
basis  points)  over the yield on the  Average  Weekly  One Year  U.S.  Treasury
Constant Maturity Index. The one-year ARM loans currently offered by the Company
generally  provide for a 200 basis point annual  interest  rate change cap and a
lifetime cap of 600 basis points over the initial rate.  The Company also offers
a  three-year  ARM loan which  adjusts  based on a margin  (generally  275 basis
points) over the yield on the three-year Treasury Note. The Company's three-year
ARM loans have a 200 basis point interest rate cap per  adjustment  period and a
lifetime cap of 500 basis points over the initial rate.  The Company also offers
loans which are fixed for the first five-, seven-

                                       9

<PAGE>

or ten-year  period of the loan term and adjust annually  thereafter  based on a
specified  margin  over the yield on the Average  Weekly One Year U.S.  Treasury
Constant  Maturity Index for the remaining loan term. These loans are classified
as ARM loans for reporting purposes and currently provide for an annual interest
rate cap not to exceed 300 basis points for the initial  adjustment  period (and
200 basis points thereafter) and a lifetime cap of 500 basis points.

      Initial  interest  rates offered on the  Company's  ARMs may be 100 to 350
basis points below the fully indexed rate.  Although borrowers on such loans are
generally  qualified  at the fully  indexed  rate,  the risk of default on these
loans  may  increase  as  interest  rates  increase.  See "-  Delinquencies  and
Non-Performing  Assets." The Company's ARMs do not permit negative  amortization
of principal,  do not contain prepayment  penalties and are not convertible into
fixed-rate  loans.  At September 30, 1999,  one- to four-family  ARMs (including
loans of $157.0 million  earning a fixed rate of interest for initial periods of
five, seven or 10 years) totaled $185.6 million, or 61.7% of the Company's total
loan portfolio.

      During  fiscal  1997,  the  Company  began to offer a 30-year  residential
mortgage  loan product with a fixed rate for the first  fifteen years and annual
rate adjustments  thereafter based on a specified margin over the Average Weekly
One Year U.S.  Treasury  Constant  Maturity Index.  In addition,  the loan has a
conversion  option which allows the  borrower to convert,  during years  sixteen
through  eighteen,  to a fixed rate for the  remaining  term.  The Company  also
offers  conventional  fixed-rate  loans  with  maximum  terms of up to 30 years,
although the Company has recently  emphasized  originations of fixed-rate  loans
with terms of 10 to 15 years. The interest rate on such loans is generally based
on competitive  factors.  The fixed-rate one- to four-family  loans described in
this  paragraph are typically  underwritten  in accordance  with Freddie Mac and
Fannie Mae standards to permit their sale in the secondary  market.  The Company
engages  in  secondary  market  sales of a portion of its  residential  mortgage
originations, as market conditions warrant. Loans held for sale at September 30,
1999  amounted  $1.2 million and  represented  a variety of  fixed-rate  one- to
four-family loans.

      The Company  originates  home equity lines of credit  secured by a lien on
the borrower's residence.  The Company's home equity lines are generally limited
to $250,000.  The Company uses the same  underwriting  standards for home equity
lines  as it uses  for  one- to  four-family  residential  mortgage  loans.  The
interest rates for home equity lines of credit float at a stated margin over the
lowest prime rate published in THE WALL STREET JOURNAL and may not exceed 15.75%
over the life of the loan.  The Company  currently  offers home equity lines for
terms of up to 30 years  with  interest  only paid for the first 10 years of the
loan term.  At September 30, 1999,  the Company had $3.2 million of  outstanding
advances  under  home  equity  lines and an  additional  $4.4  million  of funds
committed, but undrawn, under home equity lines of credit.

      The  Company  also  originates  loans  secured by co-ops and  condominiums
located  in  its  market  area.   Condominium   and  co-op  loans  are  made  on
substantially  the same terms as one- to  four-family  loans,  except that co-op
loans are made only at adjustable rates of interest.  At September 30, 1999, the
Company had $24.1 million of condominium loans and $3.7 million of co-op loans.

      In underwriting  one- to four-family  residential  real estate loans,  the
Company evaluates the borrower's ability to make principal,  interest and escrow
payments,  as well as the value of

                                       10

<PAGE>

the property that will secure the loan and  debt-to-income  ratios.  The Company
currently originates  residential mortgage loans with loan-to-value ratios of up
to 80% for  owner-occupied  homes (95% with private mortgage insurance to reduce
the Company's  exposure to 80% or less); up to 70% for non-owner occupied homes;
and up to 90% for co-op  loans.  The  Company's  home equity lines of credit are
originated in amounts  which,  together  with the amount of the first  mortgage,
generally do not exceed 80% of the appraised value of the property  securing the
loan.

      The Company's  residential  mortgage loans customarily include due-on-sale
clauses  giving the Company the right to declare  the loan  immediately  due and
payable in the event that,  among other things,  the borrower sells or otherwise
disposes of the property subject to the mortgage and the loan is not repaid.

      MULTI-FAMILY AND COMMERCIAL REAL ESTATE LENDING. The Company has increased
its emphasis on the  origination of permanent  multi-family  and commercial real
estate loans in recent years in order to increase the interest rate  sensitivity
and  yield  of  its  loan  portfolio  and  to  complement   residential  lending
opportunities.  The  Company's  commercial  real  estate and  multi-family  loan
portfolio includes loans secured by office buildings, small business facilities,
health care facilities,  industrial real estate,  apartment  buildings and other
income producing  properties  located in its market area. At September 30, 1999,
the Company had $26.8 million in commercial real estate loans, representing 8.9%
of the total loan portfolio, and $16.3 million in multi-family loans, or 5.4% of
the total loan portfolio.

      The Company's  permanent  multi-family  and  commercial  real estate loans
generally carry a maximum term of 20 years and have  adjustable  rates generally
based on a specific  index,  plus a margin.  These loans are  generally  made in
amounts of up to 75% of the lesser of the appraised  value or the purchase price
of the property,  with a projected debt service coverage ratio of at least 125%.
Appraisals on properties securing  multi-family and commercial real estate loans
are performed by an independent  appraiser designated by the Company at the time
the loan is made. All appraisals on multi-family or commercial real estate loans
are  reviewed  by  the  Company's   management.   In  addition,   the  Company's
underwriting  procedures require  verification of the borrower's credit history,
income and financial statements,  banking  relationships,  references and income
projections  for the  property.  Where  feasible,  the  Company  seeks to obtain
personal  guarantees  on these loans.  For loans in excess of $250,000,  Phase I
environmental studies are performed.

      The table below sets forth, by type of security  property,  the number and
amount  of the  Company's  multi-family  and  commercial  real  estate  loans at
September  30,  1999.  Substantially  all of the loans  referred to in the table
below are secured by properties located in the Company's market area.

                                       11

<PAGE>

                                                 Outstanding     Amount Non-
                                      Number      Principal    Performing or
                                     of Loans      Balance     of Concern(1)
                                     ---------   ------------ ---------------
                                              (Dollars in thousands)
Commercial real estate:
    Small business facilities          49          $15,938         $305
    Office buildings                    3              988          ---
    Health care facilities              5              857          ---
    Mixed use                          21            8,901          ---
    Industrial real estate              1               69          ---
Multi-family                           68           16,264          ---
                                      ---          -------         ----
    Total multi-family and
      commercial real estate loans    147          $43,017         $305
                                      ===          =======         ====

-----------------------
(1) See "- Delinquencies and Non-Performing Assets"

      At September 30, 1999, the Company's  largest  commercial real estate loan
had an outstanding balance of $1.1 million. This loan was originated in May 1999
and is  secured by a store and  apartments  located  in New York,  New York.  At
September 30, 1999, the largest  multi-family loan had a balance of $973,000 and
is secured by a 24-unit apartment building located in Corona, New York.

      Multi-family  and commercial real estate loans generally  present a higher
level of risk than loans secured by one- to four-family residences. This greater
risk is due to several  factors,  including the  concentration of principal in a
limited  number  of  loans  and  borrowers,  the  effects  of  general  economic
conditions  on income  producing  properties,  and the  increased  difficulty of
evaluating and monitoring  these types of loans.  Furthermore,  the repayment of
loans secured by multi-family and commercial real estate is typically  dependent
upon the successful  operation of the related real estate  project.  If the cash
flow from the project is reduced  (for  example,  if leases are not  obtained or
renewed), the borrower's ability to repay the loan may be impaired. There can be
no assurance that the Company will not experience increased credit problems as a
result of its increase in multi-family and commercial real estate loans.

      CONSTRUCTION AND LAND LENDING.  The Company  originates a modest amount of
construction   loans  to  individuals  and  builders  for  the  construction  of
residential real estate. At September 30, 1999, the Company's  construction loan
portfolio totaled $2.8 million, or 0.9% of the total loan portfolio. The Company
also  currently  originates  a limited  number of land loans  primarily  for the
purpose of  developing  residential  subdivisions.  At September  30, 1999,  the
Company's  land loan portfolio  totaled $1.5 million,  or 0.5% of the total loan
portfolio.  At September 30, 1999, all of the Company's land loans were made for
the purpose of developing residential lots except for one loan totaling $229,000
which was secured by commercial real estate.

      Construction loans to individuals for the construction of their residences
are  structured

                                       12
<PAGE>

to  convert  to  permanent  loans at the end of the  construction  phase,  which
typically  runs up to one year.  These  construction  loans have rates and terms
comparable to one- to four-family loans then offered by the Company, except that
during the  construction  phase,  the borrower pays interest only at a specified
margin over the prime rate. The maximum  loan-to-value  ratio of  owner-occupied
single-family  construction  loans is 75%.  Residential  construction  loans are
generally  underwritten  pursuant to the same  guidelines  used for  originating
permanent  residential  loans.  At September  30, 1999,  there were  $180,000 of
construction  loans outstanding to persons intending to occupy the premises upon
the completion of the construction.

      The  Company  also  originates  construction  loans to builders of one- to
four-family residences.  Such loans generally carry terms of up to two years and
require  the  payment  of  interest   only  for  the  loan  term.   The  maximum
loan-to-value  ratio on loans to builders for the  construction  of  residential
real  estate is 75%.  When  practical,  the  Company  seeks to  obtain  personal
guarantees on such loans. The Company generally limits loans to builders for the
construction  of homes on  speculation  for sale to two  homes per  builder.  At
September  30,  1999,  the  Company  had  $2.6  million  of  construction  loans
outstanding to builders of one- to four-family residences.

      The Company's  construction  loan agreements  generally  provide that loan
proceeds are  disbursed in increments as  construction  progresses.  The Company
reviews the progress of the  construction of the dwelling  before  disbursements
are made.

      The  Company  also  makes  loans  to  builders  and   developers  for  the
development of one- to four-family lots in the Company's market area. All of the
Company's land loans have been originated with adjustable rates of interest tied
to the prime rate of interest  and have terms of five years or less.  Land loans
are generally made in amounts up to a maximum  loan-to-value ratio of 65% on raw
land  and up to  75% on  developed  building  lots  based  upon  an  independent
appraisal.  When feasible,  the Company obtains personal guarantees for its land
loans.

      The table below sets forth, by type of security  property,  the number and
amount of the Company's  construction  and land loans at September 30, 1999, all
of which are secured by properties located in the Company's market area.

<TABLE>
<CAPTION>

                                                               Outstanding     Amount Non-
                                      Number      Loan          Principal    Performing or
                                     of Loans   Commitment       Balance     of Concern(1)
                                     --------- ------------   ------------ ---------------
                                                       (Dollars in thousands)

<S>                                    <C>      <C>              <C>            <C>
Single-family construction              8        $2,092           $1,090         $---
Other construction                      1           720               50          ---
Residential land                        7         1,224            1,224          ---
Other land                              2           278              278          ---
                                       --        ------           ------         ----
    Total construction and land loans  18        $4,314           $2,642         $---
                                       ==        ======           ======         ====

</TABLE>

-------------------
(1) See "- Delinquencies and Non-Performing Assets"

                                       13

<PAGE>

      Construction  and land loans are obtained  principally  through  referrals
from the Company's and management's  contacts in the business  community as well
as existing and walk-in customers. The application process includes a submission
to the Company of accurate plans,  specifications and costs of the project to be
constructed/developed.  These  items  are  used  as a  basis  to  determine  the
appraised  value of the  subject  property.  Loans  are  based on the  lesser of
current appraised value and/or the cost of construction (land plus building).

      Construction and land lending generally affords the Company an opportunity
to receive  interest  at rates  higher  than  those  obtainable  from  permanent
residential  loans and to receive  higher  origination  and other loan fees.  In
addition,  construction  and land loans are generally made with adjustable rates
of interest or for relatively short terms.  Nevertheless,  construction and land
lending is  generally  considered  to involve a higher level of credit risk than
one- to four-family residential lending due to the concentration of principal in
a limited  number of loans and  borrowers,  as well as the  effects  of  general
economic conditions on development  properties and on real estate developers and
managers.  In  addition,  the  nature of these  loans is such that they are more
difficult to evaluate and monitor. Finally, the risk of loss on construction and
land loans is dependent largely upon the accuracy of the initial estimate of the
individual  property's  value upon  completion and the estimated cost (including
interest) of  construction.  If the cost estimate  proves to be inaccurate,  the
Company may be required to advance funds beyond the amount originally  committed
to permit completion of the property.

      CONSUMER  LENDING.  In order to increase the interest rate  sensitivity of
the loan  portfolio  and provide a broader  range of loan products to its retail
customers,  the  Company  originates  a variety  of  consumer  loans,  including
automobile,  home  equity,  deposit  account and other loans for  household  and
personal purposes.  At September 30, 1999,  consumer loans totaled $7.2 million,
or 2.4% of total  loans  outstanding.  The  Company  intends  to  emphasize  its
consumer  lending in the future and to consider  hiring an  additional  consumer
lending officer in order to increase volume.

      Consumer  loan  terms  vary  according  to the type of loan  and  value of
collateral,  length  of  contract  and  creditworthiness  of the  borrower.  The
Company's  consumer loans are made at fixed interest rates,  with terms of up to
10 years.  Home equity loans are made at fixed rates up to a maximum loan amount
of $50,000.

      The  underwriting  standards  employed by the Company for  consumer  loans
include a determination  of the  applicant's  payment history on other debts and
the ability to meet  existing  obligations  and payments on the  proposed  loan.
Although  creditworthiness  of the  applicant  is a primary  consideration,  the
underwriting process also includes a comparison of the value of the security, if
any, in relation to the proposed loan amount.

      Consumer loans may entail greater  credit risk than  residential  mortgage
loans,  particularly  in the case of consumer  loans which are  unsecured or are
secured by rapidly depreciable  assets, such as automobiles.  In such cases, any
repossessed collateral for a defaulted consumer loan may not provide an adequate
source of repayment of the  outstanding  loan balance as a result of the greater
likelihood  of  damage,  loss  or  depreciation.   In  addition,  consumer  loan
collections are dependent on the borrower's continuing financial stability, and

                                       14

<PAGE>

thus  are  more  likely  to  be  affected  by  adverse  personal  circumstances.
Furthermore,  the  application  of various  federal  and state  laws,  including
bankruptcy and  insolvency  laws, may limit the amount which can be recovered on
such loans.  At  September  30,  1999,  there were  $103,000  of consumer  loans
delinquent 90 days or more.  There can be no assurance that  delinquencies  will
not increase in the future.

      COMMERCIAL  BUSINESS LENDING.  Federally  chartered savings  institutions,
such as the  Association,  are authorized to make secured or unsecured loans and
letters of credit for commercial,  corporate, business and agricultural purposes
and to engage in commercial leasing activities,  up to a maximum of 20% of total
assets,  provided that amounts in excess of 10% relate to small  business  loans
(as defined). The Company may from time to time make a limited number of secured
and unsecured  commercial loans to local businesses.  At September 30, 1999, the
Company had $1.1 million of commercial business loans outstanding,  representing
0.3% of the total loan portfolio.

      The Company's  commercial  business  lending policy  includes  credit file
documentation and analysis of the borrower's character and capacity to repay the
loan, the adequacy of the borrower's  capital and collateral,  and an evaluation
of conditions  affecting the borrower.  Analysis of the borrower's past, present
and  future  cash flows is also an  important  aspect of the  Company's  current
credit analysis.

      Unlike  residential  mortgage loans, which generally are made on the basis
of the borrower's ability to make repayment from his or her employment and other
income,  and which are  secured by real  property  whose  value tends to be more
easily ascertainable, commercial business loans are of higher risk and typically
are made on the basis of the borrower's  ability to make repayment from the cash
flow of the borrower's business.  As a result, the availability of funds for the
repayment of commercial  business  loans may be  substantially  dependent on the
success of the business itself.  Further,  the collateral securing the loans may
depreciate  over time,  may be difficult to appraise and may  fluctuate in value
based on the success of the business.

ORIGINATIONS, PURCHASES AND SALES OF LOANS

      Loan applications are taken at each of the Company's offices. Applications
are processed and approved at the Company's  Loan Center which is located in the
corporate headquarters. The Company currently offers incentives to employees for
loan  referrals.  The Company also employs  commissioned  loan  originators  and
utilizes  mortgage  brokers to assist in the process of obtaining  loans.  Total
loan  originations  increased  substantially  to $178.4  million in fiscal 1999,
compared  to $151.7  million in fiscal  1998 and $70.1  million in fiscal  1997,
primarily reflecting higher one- to four-family loan originations.

      While the Company  originates both fixed- and  adjustable-rate  loans, its
ability to originate  loans is dependent upon the relative  customer  demand for
loans in its market.  Demand is affected by the local  economy and the  interest
rate environment.

      Historically, most of the fixed-rate one- to four-family residential loans
originated by the Company were retained in its portfolio.  However,  in order to
reduce its  vulnerability  to

                                       15
<PAGE>

changes in interest rates, the Company currently sells in the secondary market a
portion  of its  fixed-rate  residential  mortgage  originations.  In  addition,
certain current year originations of adjustable-rate loans are generally sold in
the secondary  market.  Residential  mortgage sales amounted to $37.4 million in
fiscal 1999, compared to $69.8 million in fiscal 1998 and $2.8 million in fiscal
1997. When loans are sold, the Company typically retains the  responsibility for
collecting  and remitting  loan  payments,  making  certain that real estate tax
payments are made on behalf of borrowers,  and otherwise servicing the loans. At
September 30, 1999,  the Company  serviced  $88.4 million of mortgage  loans for
others.

      The following  table sets forth the Company's  loan  originations,  sales,
repayments and other portfolio activity for the periods indicated.

<TABLE>
<CAPTION>
                                                                  For the Year Ended September 30,
                                                            ---------------------------------------------
                                                               1999            1998            1997
                                                            --------          --------       -------
                                                                         (In thousands)
<S>                                                        <C>               <C>            <C>
Unpaid principal balances at beginning of year              $198,900          $141,488       $88,246
                                                            --------          --------       -------
Loans originated:
    Real estate mortgage loans:
        One- to four-family(1)                               141,648           139,325        60,497
        Multi-family                                           8,349             3,372           839
        Commercial                                            19,697             2,235         2,815
        Construction                                           4,597             3,734         2,913
        Land                                                     732                50           150
    Consumer and commercial business loans                     3,367             2,981         2,919
                                                            --------          --------       -------
      Total loans originated                                 178,390           151,697        70,133
                                                            --------          --------       -------
Loans sold:
    One-to four-family real estate mortgage loans            (37,476)          (69,810)       (2,822)
                                                            --------          --------       -------
Principal repayments:
    Real estate mortgage loans                               (35,866)          (21,325)      (10,846)
    Consumer and commercial business loans                    (2,637)           (2,856)       (2,766)
                                                            --------          --------       -------
      Total principal repayments                             (38,503)          (24,181)      (13,612)
                                                            --------          --------       -------
Net charge-offs                                                  (34)             (166)         (144)
Transfers to real estate owned                                   ---              (128)         (313)
                                                            --------          --------       -------
Unpaid principal balances at end of year                     301,277           198,900       141,488
Less:
   Construction loans in process                              (1,672)             (743)       (1,091)
   Allowance for loan losses                                  (1,503)           (1,302)       (1,093)
   Deferred loan origination costs (fees), net                 1,074               478          (184)
                                                            --------          --------      --------
Net loans at end of year                                    $299,176          $197,333      $139,120
                                                            ========          ========      ========

</TABLE>
                                       16

<PAGE>

-------------------------
 (1) Consists of (i) adjustable-rate loans of $107.8 million,  $89.0 million and
  $32.3 million,  and (ii) fixed-rate loans of $32.7 million,  $50.3 million and
  $28.2  million  for the  years  ended  September  30,  1999,  1998  and  1997,
  respectively.

DELINQUENCIES AND NON-PERFORMING ASSETS

      DELINQUENCY  PROCEDURES.  When a borrower fails to make a required payment
on a loan,  the  Company  attempts to cure the  delinquency  by  contacting  the
borrower. A late notice is sent on all loans over 16 days delinquent. Additional
written and verbal contacts may be made with the borrower between 30 and 90 days
after the due date. If the loan is contractually delinquent 60 days, the Company
usually  sends a 30-day  demand  letter to the borrower  and,  after the loan is
contractually  delinquent 91 days, institutes appropriate action to foreclose on
the  property.  If  foreclosed,  the  property  is  sold at  auction  and may be
purchased by the Company.  Delinquent  consumer loans are generally handled in a
similar manner.  The Company's  procedures for repossession and sale of consumer
collateral  are  subject  to  various   requirements  under  New  York  consumer
protection laws.

      Real estate  acquired by the Company as a result of foreclosure or by deed
in lieu of foreclosure is classified as real estate owned until it is sold. When
property is acquired or expected to be acquired by  foreclosure  or deed in lieu
of  foreclosure,  it is recorded at estimated fair value less the estimated cost
of disposition,  with the resulting write-down charged to the allowance for loan
losses.  After  acquisition,  all costs incurred in maintaining the property are
expensed.  Costs relating to the  development  and  improvement of the property,
however, are capitalized.

      The following  table sets forth certain  information  with respect to loan
portfolio delinquencies at the dates indicated.

<TABLE>
<CAPTION>

                                               September 30, 1999               September 30, 1998
                                       --------------------------------- ---------------------------------
                                          60-89 Days    90 Days or More     60-89 Days     90 Days or More
                                       ---------------- ---------------- ---------------- ----------------
                                       Number Principal Number Principal Number Principal Number Principal
                                       of Loans Balance of Loans Balance of Loans Balance of Loans Balance
                                       -------- ------- -------- ------- -------- ------- -------- -------
                                                               (Dollars in thousands)
<S>                                     <C>       <C>    <C>     <C>     <C>    <C>      <C>    <C>
Real estate mortgage loans:
   One- to four-family                       1      $20      4     $347      4    $257       5   $ 515
   Multi-family                            ---      ---    ---      ---    ---     ---     ---     ---
   Construction                            ---      ---    ---      ---    ---     ---     ---     ---
   Land                                    ---      ---    ---      ---    ---     ---     ---     ---
   Commercial                              ---      ---      2      305    ---     ---       1     203
Consumer loans                               3        7      8      103      3      43       5      35
                                        ------    -----  -----    -----   ----   -----    ----   -----
    Total                                    4      $27     14     $755      7    $300      11   $ 753
                                        ======    =====  =====    =====   ====   =====    ====   =====
    Delinquent loans to total loans (1)           0.01%           0.25%          0.15%           0.38%
                                                  =====           =====          =====           =====
</TABLE>

------------------------------------------------------
(1)If loans held for sale are excluded from total loans,  the percentages  would
   have  remained  the same for the 60-89 days  category and the 90 days or more
   category at September 30, 1999 (0.16% and 0.41%,  respectively,  at September
   30, 1998).

                                       17

<PAGE>


      CLASSIFICATION OF ASSETS.  Federal  regulations  require that each savings
institution  classify  its own  assets  on a  regular  basis.  In  addition,  in
connection  with  examinations of savings  institutions,  OTS and FDIC examiners
have authority to identify  problem assets and, if appropriate,  require them to
be classified.  There are three classifications for problem assets: substandard,
doubtful,  and loss.  Substandard assets have one or more defined weaknesses and
are characterized by the distinct  possibility that the institution will sustain
some  loss if the  deficiencies  are not  corrected.  Doubtful  assets  have the
weaknesses of substandard assets, with the additional  characteristics  that the
weaknesses  make  collection  or  liquidation  in full on the basis of currently
existing  facts,  conditions  and  values  questionable,  and  there  is a  high
possibility of loss. An asset classified loss is considered uncollectible and of
such  little  value that  continuance  as an asset on the  balance  sheet of the
institution  is not  warranted.  Assets  classified as  substandard  or doubtful
require the institution to establish prudent general allowances for loan losses.
If an asset or portion  thereof is  classified  as loss,  the  institution  must
either  establish  specific  allowances for loan losses in the amount of 100% of
the  portion of the asset  classified  loss,  or charge off such  amount.  If an
institution does not agree with an examiner's classification of an asset, it may
appeal this  determination to the Regional  Director of the OTS. On the basis of
management's  review,  at  September  30, 1999 the Company had  classified  $1.3
million of loans as substandard.

      The Company's  classified  assets consist  principally  of  non-performing
loans and  certain  other  loans of  concern  discussed  herein.  As of the date
hereof, these asset  classifications are substantially  consistent with those of
the OTS and FDIC.

      NON-PERFORMING  ASSETS.  The  table  below  sets  forth  the  amounts  and
categories of the Company's non-performing assets at the dates indicated.  Loans
are placed on  non-accrual  status when the  collection of principal or interest
becomes doubtful. Real estate owned represents properties acquired in settlement
of  loans.  The  Company's   prospective  adoption  of  Statement  of  Financial
Accounting Standards ("SFAS") No. 114, ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF
A LOAN,  effective  October 1, 1995, had no impact on the  comparability of this
information.

                                       18

<PAGE>

<TABLE>
<CAPTION>
                                                              At September 30,
                                                --------------------------------------------
                                                   1999   1998   1997      1996      1995
                                                -------- ------ -------- --------- ---------
                                                           (Dollars in Thousands)
<S>                                              <C>     <C>     <C>    <C>       <C>
Non-accrual loans past due ninety days or more:
  Real estate mortgage loans:
       One- to four-family                         $347    $515    $389   $1,757    $2,759
       Multi-family (1)                             ---     ---     ---      ---       389
       Commercial                                   305     203     211      214       ---
       Land                                         ---     ---     250      250        49
       Construction                                 ---     ---     279      511       279
  Consumer loans                                    103      35       9       43        54
                                                 ------  ------  ------   ------    ------
           Total                                    755     753   1,138    2,775     3,530
Real estate owned, net                              ---     305     379      603       227
                                                 ------  ------  ------   ------    ------
Total non-performing assets                        $755  $1,058  $1,517   $3,378    $3,757
                                                 ======  ======  ======   ======    ======

Allowance for loan losses                        $1,503  $1,302  $1,093     $937      $719
                                                 ======  ======  ======   ======    ======
Ratios:
  Non-performing loans to total loans receivable   0.25%   0.41%   0.94%    3.14%     4.15%
  Non-performing assets to total assets            0.16    0.28    0.48     1.30      1.80
  Allowance for loan losses to:
      Non-performing loans                       199.07  172.91   96.05    33.77     20.37
      Total loans receivable                       0.50    0.70    0.90     1.06      0.84

</TABLE>
--------------------------------
 (1) Includes a loan of $309,000  classified as a troubled debt restructuring at
  September 30, 1995.  Collections and charge-offs in fiscal 1996 eliminated the
  recorded investment in this loan.

      For the year ended  September 30, 1999,  gross interest  income of $69,000
would have been  recorded if the  non-accrual  loans at  September  30, 1999 had
remained current in accordance with their original terms. The amount of interest
income actually received on such loans in fiscal 1999 was $42,000. See Note 3 of
the Notes to Consolidated Financial Statements.

      At September 30, 1999,  the Company's  non-performing  loans  consisted of
four loans secured by one- to  four-family  real estate located in the Company's
market area which totaled $347,000; two loans for $305,000 secured by two stores
and 13 apartments  located in Yonkers,  New York; and eight consumer loans which
totaled $103,000. At September 30, 1999, there was no real estate owned.

      OTHER LOANS OF CONCERN.  In addition to the non-performing  loans and real
estate owned discussed in the preceding section,  as of September 30, 1999 there
were other loans of concern  totaling  approximately  $451,000.  These are loans
with respect to which known  information  about the possible  credit problems of
the  borrowers  or  the  cash  flows  of the  security  properties  have  caused
management  to have  concerns as to the ability of the  borrowers to comply with
present  loan  repayment  terms and which may result in the future  inclusion of

                                       19

<PAGE>

such items in the non-performing asset categories. Management has considered the
Company's  non-performing  loans and other loans of concern in establishing  the
allowance for loan losses.

      As of September 30, 1999,  the Company's  other loans of concern  included
the following loans with principal balances in excess of $200,000:

         The  Company  has a  $230,000  land loan,  secured by a lot  located in
   Patterson,  New York. The borrower intended to build a commercial building on
   the  security  property.  At  September  30,  1999,  although  this  loan was
   performing, it was classified substandard due to hazardous building materials
   on an  adjacent  lot which may result in a decline  in value of the  security
   property.  Although a phase I  environmental  study performed on the security
   property did not disclose any contamination to the security property from the
   adjoining  lot,  the  contamination  on the  adjacent  lot  was  subsequently
   discovered  and has prevented  the borrower from using the security  property
   for its intended purpose.  As a result, the loan was extended and modified in
   January  1997 as a  15-year,  self-liquidating  loan  with a  market  rate of
   interest.  The  borrower  is  continuing  to make  payments  on this  loan as
   required by the terms of the loan agreement and is waiting for the resolution
   of the problem with the adjacent property.

     The  Company  has a  $221,000  participation  interest  in a  $3.5  million
   commercial  mortgage loan secured by a two-story  office building  located in
   Queens,  New York originated by the Thrift  Association  Service  Corporation
   ("TASCO").  This loan originally had a 30-year  amortization  schedule with a
   balloon  payment  which was due in  December  1996.  Prior to this  scheduled
   maturity,  the borrower had been unsuccessful in securing  financing in order
   to payoff the loan.  As a result,  a short-term  extension was granted at the
   original terms of the loan until December 1997. In December 1997 the loan was
   extended at market  terms for an  additional  five-year  term with  principal
   payments  based on a 25-year  amortization  schedule.  Although  the loan was
   current as of September 30, 1999,  the Company  considers  this loan to be of
   concern due to its past performance and extended term.

      ALLOWANCE FOR LOAN LOSSES.  The  allowance for loan losses is  established
through a provision for loan losses charged to operations  based on management's
evaluation  of the  risk  inherent  in the  loan  portfolio.  The  allowance  is
established  as an amount that  management  believes  will be adequate to absorb
probable  losses on existing  loans.  The allowance for loan losses  consists of
amounts  specifically  allocated to  non-performing  loans and potential problem
loans (if any) as well as allowances  determined  for each major loan  category.
Loan categories such as single-family  residential  mortgages and consumer loans
are generally evaluated on an aggregate or "pool" basis by applying loss factors
to the current  balances of the various  loan  categories.  The loss factors are
determined by management  based on an evaluation of historical loss  experience,
delinquency  trends,  volume  and type of lending  conducted,  and the impact of
current economic conditions in the Company's market area.

      Management's evaluation of the adequacy of the allowance, which is subject
to periodic review by the Company's  regulators,  takes into  consideration such
factors as the historical loan

                                       20
<PAGE>

loss  experience,  known and  inherent  risks in the  portfolio,  changes in the
nature and volume of the loan portfolio,  overall portfolio  quality,  review of
specific problem loans,  estimated value of underlying  collateral,  and current
economic  conditions that may affect borrowers  ability to pay. While management
believes that it uses the best information  available to determine the allowance
for loan losses, unforeseen market conditions could result in adjustments to the
allowance for loan losses, and net earnings could be significantly  affected, if
circumstances  differ  substantially from the estimates made in making the final
determination.

      The following  table sets forth  activity in the allowance for loan losses
for the periods indicated. The Company's prospective adoption of SFAS No. 114 in
fiscal 1995 had no impact on the comparability of this information.

                                          For the Year Ended September 30,
                                    --------------------------------------------
                                    1999      1998    1997     1996      1995
                                    ------- ------- -------- -------- ----------
                                                  (Dollars in Thousands)

Balance at beginning of year        $1,302   $1,093   $937     $719      $311
Provision for losses                   235      375    300      462       493
Charge-offs:
     Real estate mortgage loans:
          One- to four-family          (23)     (45)  (132)     (97)      (76)
          Multi-family (1)             ---      ---    ---     (203)      ---
          Land                         ---      (17)   ---      ---       ---
          Construction                 ---      (91)   ---      ---       ---
     Consumer loans                    (20)     (40)   (25)     (33)      (13)
                                    ------   ------ ------     ----      ----
          Total charge-offs            (43)    (193)  (157)    (333)      (89)
Recoveries                               9       27     13       89         4
                                    ------   ------ ------     ----      ----
          Net charge-offs              (34)    (166)  (144)    (244)      (85)

Balance at end of year              $1,503   $1,302 $1,093     $937      $719
                                    ======   ====== ======     ====      ====
Ratio of net charge-offs to
     average total loans             0.02%    0.10%  0.15%    0.29%     0.10%

-------------------------
(1)Charge-offs  in fiscal 1996 relate to the Company's  purchased  participation
  interests in a multi-family loan originated by TASCO.

                                       21

<PAGE>


      The following table sets forth the allowance for loan losses  allocated by
loan category,  the total loan amounts by category,  and the percent of loans in
each category to loans receivable at the dates indicated.

<TABLE>
<CAPTION>
                                                                 At September 30,
                         ----------------------------------------------------------------------------------------------------
                                       1999                             1998                             1997
                         --------------------------------- --------------------------------- --------------------------------
                                                Percent of                        Percent of                      Percent of
                                                 Loans in                          Loans in                        Loans in
                                        Loan       Each                 Loan         Each                 Loan       Each
                                       Amounts   Category              Amounts     Category              Amounts   Category
                          Allowance      by      to Total Allowance      by        to Total   Allowance    by      to Total
                           Amount    Category(1)  Loans    Amount     Category(1)    Loans     Amount    Category    Loans
                         ---------- ------------ --------- -------- -------------- --------- ---------- ---------- ----------
                                                                  (Dollars in thousands)


Real estate mortgage loans:
<S>                       <C>       <C>           <C>     <C>        <C>            <C>       <C>      <C>          <C>
   One- to four-family      $895      $244,466      81.5%   $917       $153,891       82.9%     $608     $91,367      75.5%
   Multi-family               86        16,264       5.4      16          7,846        4.2        11       5,658       4.7
   Commercial                297        26,753       8.9     160         12,766        6.9       121      11,990       9.9
   Construction               11         2,812       0.9      23          2,613        1.4        98       2,786       2.3
   Land(2)                   118         1,502       0.5     128            932        0.5       196       1,814       1.5
Consumer and commercial
   business loans             96         8,254       2.8      58          7,544        4.1        59       7,419       6.1
                          ------      --------     -----  ------       --------      -----    ------    --------     -----
Total                     $1,503      $300,051     100.0% $1,302       $185,592      100.0%   $1,093    $121,034     100.0%
                          ======      ========     =====  ======       ========      =====    ======    ========     =====
</TABLE>

<TABLE>
<CAPTION>
                                              At September 30,
                         -----------------------------------------------------------------
                                     1996                             1995
                         -------------------------------- --------------------------------
                                               Percent of                      Percent of
                                                Loans in                        Loans in
                                      Loan        Each                 Loan       Each
                                     Amounts    Category              Amounts   Category
                          Allowance     by      to Total  Allowance      by     to Total
                           Amount    Category     Loans    Amount     Category    Loans
                         ---------- ----------- --------- --------- ----------- ----------
                                             (Dollars in thousands)


Real estate mortgage loans:
<S>                         <C>       <C>          <C>       <C>       <C>        <C>
   One- to four-family      $538      $62,283      70.6%     $302      $63,282    74.4%
   Multi-family               11        5,471       6.2        64        5,647     6.6
   Commercial                 91        9,117      10.3        66        6,575     7.7
   Construction               74        2,175       2.5        75        2,205     2.6
   Land(2)                   166        1,934       2.2       171        2,112     2.5
Consumer and commercial
   business loans             57        7,266       8.2        41        5,271     6.2
                            ----      -------     -----      ----      -------   -----
Total                       $937      $88,246     100.0%     $719      $85,092   100.0%
                            ====      =======     =====      ====      =======   =====

</TABLE>

-------------------------
(1) Excludes real estate  mortgage  loans held for sale of $1.2  million,  $13.3
  million and $20.4 million, respectively, at September 30, 1999, 1998 and 1997.
(2) The  allowance  principally  represents  an  allocation  to land  loans  "of
  concern." See "- Other Loans of Concern."


                                       22

<PAGE>


INVESTMENT ACTIVITIES

      GENERAL.  The Company  utilizes  mortgage-backed  and other  securities in
virtually  all aspects of its  asset/liability  management  strategy.  In making
investment decisions, the Board of Directors considers,  among other things, the
Company's yield and interest rate objectives,  its interest rate and credit risk
position, and its liquidity and cash flow.

      Yonkers Savings must maintain  minimum levels of investments  that qualify
as liquid  assets  under OTS  regulations.  Liquidity  may  increase or decrease
depending upon the  availability of funds and comparative  yields on investments
in relation to the return on loans. Cash flow projections are regularly reviewed
and updated to assure that adequate liquidity is maintained.

      Generally,  the investment  policy of the Company is to invest funds among
categories   of   investments   and   maturities   based   upon  the   Company's
asset/liability  management  policies,  investment  quality,  loan  and  deposit
volume, liquidity needs and performance objectives. SFAS No. 115, ACCOUNTING FOR
CERTAIN  INVESTMENTS IN DEBT AND EQUITY SECURITIES,  requires that securities be
classified into three categories:  trading, held to maturity,  and available for
sale. Securities that are bought and held principally for the purpose of selling
them in the near term are  classified as trading  securities and are reported at
fair  value  with  unrealized  gains  and  losses  included  in  earnings.  Debt
securities for which the Company has the positive  intent and ability to hold to
maturity are classified as held to maturity and reported at amortized  cost. All
other securities not classified as trading or held to maturity are classified as
available  for sale.  Available-for-sale  securities  are reported at fair value
with unrealized gains and losses included,  on an after-tax basis, in a separate
component of  stockholders'  equity.  At September 30, 1999,  the Company had no
securities classified as trading. At September 30, 1999, $116.7 million or 84.2%
of  the  Company's  mortgage-backed  and  other  securities  was  classified  as
available for sale.  The remaining  $21.9 million,  or 15.8%,  was classified as
held to maturity.

      MORTGAGE-BACKED   SECURITIES.   The  Company  invests  in  mortgage-backed
securities   in  order  to   supplement   loan   production   and   achieve  its
asset/liability   management   goals.   The   Company   has  also   invested  in
mortgage-backed   securities,   including  collateralized  mortgage  obligations
("CMOs"),  in order to take  advantage  of the spread  between the yield on such
securities  and the cost of  borrowings  from the  FHLB  and  other  "wholesale"
sources.  In a number of  instances,  the  expected  maturity of the  securities
purchased has been significantly longer than the term of the related borrowings.

       Substantially all of the mortgage-backed  securities owned by the Company
are issued,  insured or  guaranteed  either  directly or indirectly by a federal
agency or are rated "AA" or higher.  As of September  30, 1999,  the Company did
not have any  mortgage-backed  securities of a single issuer in excess of 10% of
the Company's  stockholders' equity,  except for federal agency obligations.  At
September 30, 1999, the Company classified  mortgage-backed  securities of $21.4
million as held to maturity and $75.9 million as available for sale.

                                       23

<PAGE>

Consistent with its asset/liability  management strategy,  at September 30, 1999
$19.4  million,  or  19.4%,  of the  Company's  mortgage-backed  securities  had
adjustable interest rates.

      CMOs  are  securities   derived  by  reallocating   the  cash  flows  from
mortgage-backed  securities  or pools  of  mortgage  loans  in  order to  create
multiple classes, or tranches, of securities with coupon rates and average lives
that differ from the underlying  collateral as a whole.  The term to maturity of
any particular  tranche is dependent upon the prepayment speed of the underlying
collateral as well as the structure of the particular CMO. As a result, the cash
flows (and hence the values) of certain CMOs are subject to substantial change.

      Management  believes that CMOs at times  represent  attractive  investment
alternatives  relative to other  investments due to the wide variety of maturity
and repayment options available  through such  investments.  In particular,  the
Company has from time to time  concluded  that short and  intermediate  duration
CMOs (seven-year or less estimated average life) represent a better  combination
of  rate  and  duration  than  adjustable-rate  mortgage-backed  securities.  At
September  30, 1999,  the Company  held $4.5 million of CMOs,  all of which were
classified as held-to-maturity.

       Prior to the purchase of a CMO,  the Company  conducts an analysis of the
security to assess its price  volatility.  The  analysis is designed to show the
expected  change in the value of the security  that would result from  immediate
parallel  shifts  in the  yield  curve of plus or minus  100,  200 and 300 basis
points. The Company  establishes risk tolerance levels for its CMO activities on
a periodic  basis  based on its  overall  asset/liability  management  goals and
market conditions.

      The fair value of the Company's mortgage-backed  securities,  particularly
those  carrying  fixed rates,  would  decline  significantly  in the event of an
increase in interest  rates.  In  addition,  a decrease in interest  rates could
result in an increase in prepayments on the fixed-rate  portion of the Company's
mortgage-backed  securities  portfolio.  Funds  from  such  prepayments  may  be
reinvested at a lower yield. Similarly, a decline in interest rates would result
in the downward adjustment of the rates earned on the Company's adjustable-rate,
mortgage-backed  securities  portfolio  resulting  in lower  yields and interest
income in future periods.

       For  additional  information  regarding  the  Company's   mortgage-backed
securities  portfolio,  see  Note  2 of  the  Notes  to  Consolidated  Financial
Statements.

                                       24
<PAGE>

      The following  table sets forth the  amortized  cost and fair value of the
mortgage-backed  securities portfolio, by accounting classification category and
by type of security, at the dates indicated:

                                             At September 30,
                         -------------------------------------------------------
                               1999                1998               1997
                         ----------------- -------------------- ----------------
                         Amortized    Fair  Amortized   Fair    Amortized  Fair
                           Cost      Value     Cost     Value      Cost   Value
                         --------   -------  --------  --------  ------- -------
Held to Maturity
 Pass-through securities $ 16,897   $16,934  $ 24,704  $ 25,231  $35,283 $35,905
 CMOs                       4,539     4,531     9,104     9,165   15,063  15,066
                         --------   -------  --------  --------  ------- -------
   Total                   21,436    21,465    33,808    34,396   50,346  50,971
                         --------   -------  --------  --------  ------- -------
Available for Sale
 Pass-through securities   78,651    75,944    78,549    79,678   34,460  34,892
 CMOs                         ---       ---       ---       ---    8,148   8,146
                         --------   -------  --------  --------  ------- -------
   Total                   78,651    75,944    78,549    79,678   42,608  43,038
                         --------   -------  --------  --------  ------- -------
   Total mortgage-backed
     securities          $100,087   $97,409  $112,357  $114,074  $92,954 $94,009
                         ========   =======  ========  ========  ======= =======

      All  mortgage-backed  securities are guaranteed by, Ginnie Mae, Fannie Mae
or Freddie Mac, except for privately-issued securities with an amortized cost of
$115,000,   $160,000  and  $302,000  at  September  30,  1999,  1998  and  1997,
respectively.

                                       25
<PAGE>

      The following table sets forth certain information regarding the amortized
cost,  fair value and weighted  average yield of the  Company's  mortgage-backed
securities at September 30, 1999.  The entire  amortized  cost and fair value of
such  securities  are  reflected in the maturity  period that includes the final
security  payment  date and,  accordingly,  no effect has been given to periodic
repayments or possible prepayments.  In addition, under the structure of some of
the Company's CMOs, the Company's short- and intermediate-tranche interests have
repayment priority over the longer-term tranches of the same underlying mortgage
pool.

<TABLE>
<CAPTION>
                                                           At September 30, 1999
                                          --------------------------------------------------------
                                                 Held to Maturity         Available for Sale
                                          ----------------------------- --------------------------
                                                              Weighted                    Weighted
                                          Amortized   Fair    Average  Amortized    Fair   Average
                                            Cost      Value    Yield      Cost     Value    Yield
                                          -------- --------- ---------- -------- -------- --------
                                                               (Dollars in thousands)
<S>                                      <C>       <C>         <C>     <C>       <C>      <C>
Pass-through securities:
   Due after 1 year but within 5 years    $   318   $   332     7.95%   $   ---   $   ---    ---%
   Due after 5 years but within 10 years       67        68     7.39        ---       ---    ---
   Due after 10 years                      16,512    16,534     6.58     78,651    75,944   6.81
                                          -------   -------     ----    -------   -------   ----
     Total                                $16,897   $16,934     6.60%   $78,651   $75,944   6.81%
                                          =======   =======     ====    =======   =======   ====
CMOs:
   Due after 1 year but within 5 years    $   280   $   285     8.00%   $   ---   $   ---    ---%
   Due after 5 years but within 10 years      641       638     5.75        ---       ---    ---
   Due after 10 years                       3,618     3,608     5.62        ---       ---    ---
                                          -------   -------     ----    -------   -------   ----
     Total                                $ 4,539   $ 4,531     5.79%   $   ---   $   ---    ---%
                                          =======   =======     ====    =======   =======   ====
</TABLE>

      The  following  table  sets  forth  the  activity  in the  mortgage-backed
securities portfolio for the periods indicated.

                                        For the Year Ended September 30,
                                     -------------------------------------
                                         1999        1998         1997
                                     ----------- ------------ ------------
                                                (In thousands)

Amortized cost at beginning of year   $112,357     $92,954       $80,964
Purchases:
 Pass-through securities:
   Fixed rate                           34,851      74,391        15,144
   Adjustable rate                         ---         ---         2,502
                                      --------     -------       -------
     Total pass-through securities      34,851      74,391        17,646
 CMOs                                      ---         ---         8,149
                                      --------     -------       -------
     Total purchases                    34,851      74,391        25,795
                                      --------     -------       -------
Sales                                  (15,377)    (16,667)       (4,372)
Principal repayments                   (31,414)    (38,116)       (9,421)
Premium amortization, net of
    discount accretion                    (330)       (205)          (12)
                                      --------     -------       -------
Amortized cost at end of year         $100,087    $112,357       $92,954
                                      ========     =======       =======

                                       26

<PAGE>

      OTHER SECURITIES. In addition to mortgage-backed  securities,  the Company
also  invests  in   high-quality   assets   (primarily   government  and  agency
obligations)  with short and intermediate  terms (typically seven years or less)
to maturity.  At  September  30,  1999,  the Company did not own any  investment
securities of a single issuer, which exceeded 10% of the Company's stockholders'
equity,  other than U.S. Government or federal agency obligations.  From time to
time, the Company holds  high-grade,  medium-term  (up to five years)  corporate
debt securities,  as well as common stocks and mutual fund shares. See Note 2 of
the  Notes to  Consolidated  Financial  Statements  for  additional  information
regarding the Company's securities portfolio.

      The following  table sets forth the amortized cost and fair value of other
securities,  by accounting  classification  category and by type of security, at
the dates indicated:

<TABLE>
<CAPTION>
                                                         At September 30,
                                        -------------------------------------------------
                                                1999           1998           1997
                                        --------------- --------------- -----------------
                                        Amortized  Fair Amortized  Fair Amortized   Fair
                                           Cost   Value    Cost   Value    Cost    Value
                                        -------- ------ -------- ------ -------- --------
                                                        (Dollars in thousands)
<S>                                      <C>     <C>     <C>     <C>     <C>      <C>
Available for Sale
 U.S. Government and Agency securities   $41,527 $40,156 $43,801 $44,810 $40,805  $41,469
 Equity securities                           818     612     967     737   1,923    1,779
                                         ------- ------- ------- ------- -------  -------
     Total                                42,345  40,768  44,768  45,547  42,728   43,248
                                         ------- ------- ------- ------- -------  -------
Held to Maturity
  U.S. Government and Agency securities  $   500 $   494 $ 9,495 $ 9,553 $25,983  $25,931
                                         ------- ------- ------- ------- -------  -------
Total other securities                   $42,845 $41,262 $54,263 $55,100 $68,711  $69,179
                                         ======= ======= ======= ======= =======  =======
</TABLE>

      The following table sets forth certain information regarding the amortized
cost,  fair  value  and  weighted  average  yield of other  debt  securities  at
September 30, 1999, by remaining period to contractual maturity.

                                                 At September 30, 1999
                                    --------------------------------------------
                                      Held to Maturity      Available for Sale
                                    --------------------- ----------------------
                                                 Weighted               Weighted
                                   Amortized Fair Average Amortized Fair Average
                                       Cost  Value Yield    Cost   Value  Yield
                                    ------- ----- ------- -------- ----- -------
                                                 (Dollars in thousands)
U.S. Government and Agency securities:
 Due after 1 year but within 5 years   $500  $494  5.99% $   --- $   ---   ---%
 Due after 5 years but within 10 years  ---   ---   ---    2,000   2,021  7.58
 Due after 10 years                     ---   ---   ---   39,527  38,135  7.24
                                       ----  ----  ----  ------- -------  ----
  Total                                $500  $494  5.99% $41,527 $40,156  7.25%
                                       ====  ====  ====  ======= =======  ====

                                       27
<PAGE>

SOURCES OF FUNDS

      GENERAL. The Company's primary sources of funds are deposits,  borrowings,
payments (including prepayments) of loan principal, interest earned on loans and
securities, repayments of securities and other funds provided from operations.

      DEPOSITS.  The Company offers a variety of deposit  accounts having a wide
range of interest  rates and terms.  The Company's  deposits  consist of regular
savings  (passbook)  accounts,  transaction (NOW and checking)  accounts,  money
market  accounts,  club  accounts  and  certificate  accounts.  The Company only
solicits deposits in its market area and does not accept brokered deposits.  The
Company  relies  primarily on  competitive  pricing  policies,  advertising  and
customer service to attract and retain these deposits and provides incentives to
employees who refer new deposit  customers to the Company.  The Company also has
ATMs located in eight branch offices and three offsite locations, one located in
a hospital and two in supermarkets.

      The variety of deposit  accounts  offered by the Company has allowed it to
be competitive in obtaining funds and to respond with  flexibility to changes in
consumer demand.  As certain customers have become more interest rate conscious,
the Company has become more  susceptible to short-term  fluctuations  in deposit
flows.  The  Company  manages the  pricing of its  deposits in keeping  with its
asset/liability management, profitability and growth objectives.

      Management  believes  that the  "core"  portion of the  Company's  regular
savings,  transaction,  money market and club accounts can have a lower cost and
be more  resistant  to interest  rate  changes  than  certificate  accounts  and
therefore  are  relatively  stable  sources of  deposits.  These  core  accounts
increased  by a higher  amount in 1999 than in other recent  years.  The Company
continues  to utilize  customer  service and  marketing  initiatives  (including
newspaper  advertisements)  in an effort to maintain  and increase the volume of
such deposits. However, the ability of the Company to attract and maintain these
accounts  (as well as  certificate  accounts)  has been and will  continue to be
affected by market conditions.

                                       28
<PAGE>

      The following table sets forth the deposit activity of the Company for the
periods indicated.

                                   For the Year Ended September 30,
                                 -----------------------------------
                                    1999         1998          1997
                                 ----------- ------------ ----------
                                        (Dollars in thousands)

Balance at beginning of year      $231,181     $207,933     $190,675
Deposits                           738,157      593,174      425,392
Withdrawals                       (705,907)    (578,982)    (416,056)
Interest credited                    9,543        9,056        7,922
                                  --------     --------     --------
Balance at end of year            $272,974     $231,181     $207,933
                                  ========     ========     ========
Net increase during the year:
    Amount                        $ 41,793     $ 23,248     $ 17,258
                                  ========     ========     ========
    Percent                          18.1%        11.2%         9.1%
                                  ========     ========     ========

      The following table sets forth the  distribution of the Company's  deposit
accounts and the related weighted average interest rates at the dates indicated.

<TABLE>
<CAPTION>
                                                                  At September 30,
                              ------------------------------------------------------------------------------------
                                            1999                       1998                        1997
                                          Percent Weighted             Percent  Weighted          Percent Weighted
                                         of Total  Average             of Total  Average          of Total Average
                                Amount   Deposits   Rate     Amount    Deposits   Rate    Amount  Deposits  Rate
                              --------- --------- --------- -------- ---------- -------- ------- --------- -------
                                                             (Dollars in thousands)

<S>                           <C>          <C>     <C>     <C>          <C>      <C>     <C>       <C>     <C>
Checking accounts              $10,769      4.0%     ---%   $  5,423      2.4%     ---%   $ 4,655    2.0%    ---%
NOW accounts                    24,708      9.1     1.06      21,123      9.1     1.00     19,055    8.2    2.00
Money market accounts           33,429     12.3     3.19      27,613     11.9     3.64     21,624    9.4    3.33
Regular savings accounts        50,776     18.6     2.23      43,492     18.8     2.43     44,591   19.3    2.56
Club accounts                    1,480      0.5     2.23       1,282      0.6     2.43      1,132    0.6    2.56
Savings certificate accounts   151,812     55.6     5.04     132,248     57.2     5.43    116,876   50.6    5.45
                              --------    -----     ----    --------    -----     ----   --------   ----    ----
    Total                     $272,974    100.0%    3.71%   $231,181    100.0%    4.10%  $207,933   89.9%   4.15%
                              ========    =====     ====    ========    =====     ====   ========   ====    ====
</TABLE>

      The following  table sets forth,  by interest  rate ranges,  the amount of
savings certificate  accounts  outstanding at the dates indicated and the period
to maturity of savings certificate accounts outstanding at September 30, 1999.

<TABLE>
<CAPTION>
                                  At September 30, 1999
                 ------------------------------------------------------
                                    Period to Maturity                      Total at
                 ------------------------------------------------------    September 30,
                  Less than   One to     More than             Percent  -------------------
                  One Year  Three Years Three Years   Total   of Total    1998       1997
                 --------- ------------ ------------ --------- -------- --------- ---------
                                                  (Dollars in thousands)

<S>              <C>          <C>         <C>        <C>         <C>    <C>        <C>
4.00% and below  $  2,539     $    80     $  ---     $  2,619    1.7%   $    ---   $    ---
4.01% to 5.00%     58,409      14,240      1,513       74,162   48.9      29,677     31,003
5.01% to 6.00%     39,040      23,407      4,139       66,586   43.9      82,960     74,440
6.01% to 7.00%      7,118         920        196        8,234    5.4      19,611     11,433
7.01% and above       211         ---        ---          211    0.1         ---        ---
                 --------     -------     ------     --------  -----    --------   --------
    Total        $107,317     $38,647     $5,848     $151,812  100.0%   $132,248   $116,876
                 ========     =======     ======     ========  =====    ========   ========
</TABLE>

                                       29

<PAGE>

      The  following  table sets forth the  maturity  distribution  and  related
weighted average interest rates for savings  certificate  accounts with balances
less than $100,000, accounts of $100,000 or more, and total savings certificates
at September 30, 1999.


                                Less than $100,000 $100,000 or more  Total
                                ------------------ ---------------- -----------
                                          Weighted      Weighted       Weighted
                                           Average       Average        Average
                                    Amount  Rate  Amount   Rate   Amount  Rate
                                ---------- ------ ------- ------- ------- -----
                                                 (Dollars in thousands)

Within three months               $ 29,953 4.91% $ 5,110   4.90% $ 35,063 4.91%
After three but within six months   23,988 4.87    3,943   5.15    27,931 4.91
After six but within 12 months      37,168 4.95    7,155   5.19    44,323 4.99
                                  --------       -------         --------
    Total within one year           91,109 4.92   16,208   5.09   107,317 4.94
After one but within two years      28,067 5.18    5,423   5.48    33,490 5.23
After two but within three years     4,553 5.34      604   5.56     5,157 5.36
After three but within five years    5,848 5.38      ---    ---     5,848 5.38
                                  --------       -------         --------
    Total                         $129,577 5.01% $22,235   5.20% $151,812 5.04%
                                  ========       =======         ========

      BORROWINGS.  The  Company's  other  available  sources  of  funds  include
securities  repurchase  agreements  and advances from the FHLB of New York. As a
member of the FHLB of New York,  the Company is required to own capital stock in
the FHLB of New York and is  authorized  to apply for advances  from the FHLB of
New York.  Each FHLB credit  program  has its own  interest  rate,  which may be
fixed, or variable, and range of maturities.  The FHLB of New York may prescribe
the acceptable  uses for these  advances,  as well as limitations on the size of
the advances and repayment provisions.  At September 30, 1999, the Company had a
collateral  pledge  arrangement  with the FHLB of New York pursuant to which the
Company may borrow advances of up to $113.8 million. On such date, $47.9 million
of FHLB advances  were  outstanding.  These  advances were used to fund mortgage
loans.

      The Company enters into securities  repurchase agreements with the FHLB of
New York  utilizing  mortgage-backed  and other  securities  as  collateral.  At
September 30, 1999,  the Company had $100.0  million of  outstanding  borrowings
under   securities   repurchase   agreements   which  were   collateralized   by
mortgage-backed  and other  debt  securities  with a total  fair value of $106.8
million.

      The following  table sets forth  information  concerning  the balances and
interest rates on borrowings at the dates and for the periods indicated.

                                       30

<PAGE>

                                                        At or for the Year
                                                       Ended September 30,
                                                   ----------------------------
                                                     1999       1998      1997
                                                   --------- ---------- -------
                                                      (Dollars in thousands)

Securities repurchase agreements:
    Balance at end of year                         $ 99,987  $107,790  $54,096
    Average balance during year                      82,681    81,892   32,074

Maximum outstanding at any month end                100,962   119,890   54,096
    Weighted average interest rate at end of year      5.53%     5.64%    5.82%
    Average interest rate during the year              5.48      5.76     5.77
FHLB advances:
    Balance at end of year                         $ 47,949  $    ---  $ 6,000
    Average balance during year                      14,475     4,139    3,186
    Maximum outstanding at any month end             47,949    11,000    7,500
    Weighted average interest rate at end of year      5.19%      ---%    6.75%
    Average interest rate during the year              5.61      5.99     5.84


      See  Note 7 of the  Notes to the  Consolidated  Financial  Statements  for
further information  concerning the Company's securities  repurchase  agreements
and FHLB advances.

SUBSIDIARIES

      At September  30, 1999,  the  Association  had two  subsidiaries,  Yonkers
Financial Services Corporation,  which offers life insurance and annuities on an
agency basis to the  Association's  customers and Yonkers REIT, Inc., see note 8
of the Notes to Consolidated Financial Statements.

COMPETITION

      The Company faces extremely  strong  competition  both in originating real
estate loans and in attracting deposits.  Competition in originating loans comes
primarily  from  mortgage  bankers,  commercial  banks,  credit unions and other
savings  institutions,  which also make loans secured by real estate  located in
the Company's  market area.  The Company  competes for loans  principally on the
basis of the  interest  rates  and loan fees it  charges,  the types of loans it
originates and the quality of services it provides to borrowers.

      Competition  for deposits is intense given the size of the New York market
and the fact that it is the home state for many large  regional and money center
banks.  Competition  for  deposits is  principally  from money market and mutual
funds,  securities  firms,  commercial  banks,  credit  unions and other savings
institutions  located in the same communities.  There is further competition for
deposits from  institutions  offering home and internet  computer  banking.  The
ability of the Company to attract and retain deposits  depends on its ability to
provide an investment  opportunity  that satisfies the requirements of investors
as to rate of return,

                                       31

<PAGE>

liquidity,  risk,  convenient  locations  and  other  factors.  The  Company  is
significantly smaller than most of its competitors,  which due to their size and
economies of scale, generally offer a broader range of deposit products than the
Company. The Company competes for these deposits by offering deposit accounts at
competitive  rates,  convenient  business  hours,  availability  of  ATMs  and a
customer  oriented staff. As of June 30, 1998, the latest date such  information
was  available,  there were 323 other thrift,  commercial  bank and credit union
offices in Westchester  County which compete for deposits.  As of June 30, 1998,
the Company held approximately 1.1% of total deposits in Westchester County.

EMPLOYEES

      At  September  30, 1999,  the Company had a total of 90  full-time  and 11
part-time  employees.  None of the Company's  employees are  represented  by any
collective bargaining agreement.  Management considers its employee relations to
be good.

REGULATION

      GENERAL.  Yonkers  Savings  is a  federally  chartered  savings  and  loan
association,  the deposits of which are federally insured and backed by the full
faith and credit of the United States Government.  Accordingly,  Yonkers Savings
is  subject to broad  federal  regulation  and  oversight  extending  to all its
operations.  Yonkers  Savings is a member of the FHLB of New York and is subject
to certain  limited  regulation by the Board of Governors of the Federal Reserve
System  ("Federal  Reserve  Board").  As the savings and loan holding company of
Yonkers Savings,  the Holding Company also is subject to federal  regulation and
oversight.  The purpose of holding company  regulation is to protect  subsidiary
savings associations.  Certain of these regulatory requirements and restrictions
are discussed below or elsewhere in this document.

      FEDERAL  REGULATION  OF  SAVINGS  ASSOCIATIONS.   The  OTS  has  extensive
authority  over  the  operations  of  savings  associations.  As  part  of  this
authority, Yonkers Savings is required to file periodic reports with the OTS and
is subject to periodic  examinations  by the OTS and the FDIC.  The last regular
OTS safety and soundness  examination of Yonkers Savings was as of July 1, 1999.
When these examinations are conducted by the OTS and the FDIC, the examiners may
require  Yonkers  Savings to provide for higher  general or  specific  loan loss
reserves.  All savings  associations  are subject to a  semi-annual  assessment,
based upon the savings association's total assets, to fund the operations of the
OTS.  Yonkers  Savings' OTS assessment  for the fiscal year ended  September 30,
1999 was approximately $80,000.

      The  OTS  also  has  extensive  enforcement  authority  over  all  savings
institutions  and their holding  companies,  including  Yonkers  Savings and the
Holding Company.  This enforcement  authority includes,  among other things, the
ability to assess civil money penalties,  to issue  cease-and-desist  or removal
orders and to initiate injunctive actions.

      Yonkers  Savings'  general  permissible  lending  limit  for  loans-to-one
borrower is equal to the greater of  $500,000 or 15% of  unimpaired  capital and
surplus  (except  for  loans  fully

                                       32
<PAGE>

secured by certain readily  marketable  collateral,  in which case this limit is
increased to 25% of  unimpaired  capital and  surplus).  At September  30, 1999,
Yonkers Savings' lending limit under this restriction was $5.1 million.  Yonkers
Savings is in compliance with the loans-to-one borrower limitation.

      INSURANCE OF ACCOUNTS AND  REGULATION  BY THE FDIC.  As insurer,  the FDIC
imposes deposit insurance premiums and is authorized to conduct  examinations of
and to require reporting by FDIC-insured institutions.  It also may prohibit any
FDIC-insured  institution  from engaging in any activity the FDIC  determines by
regulation  or order to pose a serious  risk to the SAIF.  The FDIC also has the
authority to initiate  enforcement actions against savings  associations,  after
giving the OTS an opportunity to take such action, and may terminate the deposit
insurance if it determines that the institution has engaged in unsafe or unsound
practices or is in an unsafe or unsound condition.

      The FDIC's deposit  insurance  premiums are assessed  through a risk-based
system under which all insured  depository  institutions  are placed into one of
nine  categories  and  assessed  insurance  premiums,  based upon their level of
capital and supervisory evaluation. Under the system, institutions classified as
well  capitalized  (I.E., a core capital ratio of at least 5%, a ratio of Tier 1
or core capital to  risk-weighted  assets  ("Tier 1  risk-based  capital") of at
least 6% and a risk-based  capital ratio of at least 10%) and considered healthy
pay the  lowest  premium,  while  institutions  that  are less  than  adequately
capitalized (I.E., core or Tier 1 risk-based capital ratios of less than 4% or a
risk-based  capital  ratio  of less  than  8%)  and  considered  of  substantial
supervisory concern pay the highest premium. Risk classifications of all insured
institutions are made by the FDIC for each  semi-annual  assessment  period.  At
September  30,  1999,  the  Association  was  classified  as a  well-capitalized
institution.

      The premium schedule for both Bank Insurance Fund ("BIF") and SAIF insured
institutions  ranges  from 0 to 27  basis  points  for  each  $100  in  domestic
deposits.  The  Association's  most recent  assessment  rate was 0 basis points.
However,  SAIF-insured  institutions are required to pay a Financing Corporation
(FICO)  assessment,  in order to fund the  interest  on bonds  issued to resolve
thrift  failures in the 1980s,  currently  equal to about 6 basis points,  while
BIF-insured  institutions  currently pay an assessment equal to about 1.50 basis
points for each $100 in  domestic  deposits.  The  assessment  for  SAIF-insured
institutions  is  expected  to be reduced to about 2 basis  points no later than
January  1,  2000,  when  BIF-insured  institutions  fully  participate  in  the
assessment. These assessments,  which may be revised based upon the level of BIF
and SAIF deposits, will continue until the FICO bonds mature in the year 2015.

      REGULATORY CAPITAL  REQUIREMENTS.  Federally insured savings associations,
such as Yonkers Savings,  are required to maintain a minimum level of regulatory
capital. The OTS has established capital standards, including a tangible capital
requirement,  a leverage  ratio (or core capital)  requirement  and a risk-based
capital requirement applicable to such savings associations.

                                       33
<PAGE>

      The  capital  regulations  require  tangible  capital  of at least 1.5% of
adjusted total assets (as defined by regulation). At September 30, 1999, Yonkers
Savings had tangible capital of $33.7 million, or 7.4% of adjusted total assets,
which is $26.9 million above the minimum  requirement  of 1.5% in effect on that
date.

       In  addition,  all  intangible  assets,  other  than a limited  amount of
purchased  mortgage  servicing  rights and credit  card  relationships,  must be
deducted from tangible capital for calculating  compliance with the requirement.
At September 30, 1999, Yonkers Savings had no intangible assets.

      The OTS regulations  establish  special  capitalization  requirements  for
savings associations that own subsidiaries.  In determining  compliance with the
capital requirements,  all subsidiaries engaged solely in activities permissible
for national  banks or engaged in certain other  activities  solely as agent for
its customers are  "includable"  subsidiaries  that are consolidated for capital
purposes in proportion to the association's level of ownership.  Debt and equity
investments in excludable  subsidiaries are deducted from assets and capital. At
September 30, 1999, Yonkers Savings had two "includable" subsidiaries.

      The capital  standards  also require core capital  equal to at least 4% of
adjusted total assets.  Core capital generally consists of tangible capital plus
certain  intangible  assets,  including a limited  amount of purchased  mortgage
servicing rights and credit card  relationships.  At September 30, 1999, Yonkers
Savings had core  capital  equal to $33.7  million,  or 7.4% of  adjusted  total
assets,  which is $15.4 million above the minimum leverage ratio  requirement of
4% in effect on that date.

       The OTS risk-based capital  regulations  require savings  associations to
have  total  capital  of at  least 8% of  risk-weighted  assets.  Total  capital
consists  of  core  capital,   as  defined  above  and  supplementary   capital.
Supplementary  capital  consists  of  certain  permanent  and  maturing  capital
instruments  that do not qualify as core capital and general  valuation loan and
lease  loss  allowances  up to a  maximum  of  1.25%  of  risk-weighted  assets.
Supplementary  capital may be used to satisfy the risk-based capital requirement
only up to the amount of core capital.  At September 30, 1999,  Yonkers  Savings
had no capital  instruments  that  qualify  as  supplementary  capital  and $1.5
million  of  general  loan  loss   reserves,   which  was  less  than  1.25%  of
risk-weighted assets.

      In determining the amount of risk-weighted  assets, all assets,  including
certain  off-balance sheet items, are multiplied by a risk weight,  ranging from
0% to 100%,  based on the risk inherent in the type of asset.  For example,  the
OTS has assigned a risk weight of 50% for prudently  underwritten permanent one-
to four-family  first lien mortgage  loans not more than 90 days  delinquent and
having a loan to value ratio of not more than 80% at origination  unless insured
to such ratio by an insurer approved by Fannie Mae or Freddie Mac.

      At September 30, 1999,  Yonkers Savings had total capital of $35.2 million
(including  $33.7  million  in core  capital  and  $1.5  million  in  qualifying
supplementary  capital) and  risk-weighted  assets of $196.4 million  (including
$2.8 million in converted off-balance sheet items),

                                       34

<PAGE>

or total capital of 18.0% of risk-weighted assets. This amount was $19.5 million
above the 8% requirement in effect on that date.

      The OTS is authorized to impose  capital  requirements  in excess of these
standards on individual  associations on a case-by-case  basis. The OTS and FDIC
are  authorized  and,  under  certain  circumstances  required,  to take certain
actions   against  savings   associations   that  fail  to  meet  their  capital
requirements.  The OTS is  generally  required to take  action to  restrict  the
activities of an  "undercapitalized  association"  (generally  defined to be one
with less than either 4% core  capital  ratio,  a 4% Tier 1  risk-based  capital
ratio or an 8% risk-based  capital ratio).  Any such  association  must submit a
capital  restoration  plan and until  such plan is  approved  by the OTS may not
increase its assets,  acquire another institution,  establish a branch or engage
in any new activities, and generally may not make capital distributions. The OTS
is  authorized  to impose the  additional  restrictions  that are  applicable to
significantly undercapitalized associations.

      The OTS is also generally  authorized to reclassify and association into a
lower capital  category and impose  restrictions  applicable to such category if
the  institution is engaged in unsafe or unsound  practices or is in a an unsafe
or unsound condition.

      The  imposition  by the OTS or the  FDIC of any of these  measures  on the
Company or the Association  may have a substantial  adverse effect on operations
and profitability.

      LIMITATIONS ON DIVIDENDS AND OTHER CAPITAL DISTRIBUTIONS.  OTS regulations
impose various  restrictions  on  associations  with respect to their ability to
make  distributions  of capital which include  dividends,  stock  redemptions or
repurchases,  cash-out mergers and transactions  charged to the capital account.
OTS regulations  prohibit an association  from declaring or paying any dividends
or from repurchasing any of its stock if, as a result, the regulatory capital of
the association  would be reduced below the amount required to be maintained for
the  liquidation  account  established  in  connection  with its mutual to stock
conversion.

      The  Association may make a capital  distribution  without the approval of
the OTS  provided  we notify  the OTS,  30 days  before we declare  the  capital
distribution  and we meet the following  requirements:  (i) we have a regulatory
rating  in one  of the  two  top  examination  categories,  (ii)  we are  not of
supervisory concern, and will remain adequately- or well-capitalized, as defined
in  the  OTS  prompt  corrective  action  regulations,  following  the  proposed
distribution,  and (iii) the distribution does not exceed our net income for the
calendar  year-to-date  plus  retained  net income for the previous two calendar
years (less any dividends  previously  paid). If we do not meet the above stated
requirements,  we must obtain the prior approval of the OTS before declaring any
proposed distributions.

                                       35

<PAGE>

      QUALIFIED THRIFT LENDER TEST. All savings associations,  including Yonkers
Savings,  are required to meet a qualified  thrift lender  ("QTL") test to avoid
certain  restrictions  on  their  operations.   This  test  requires  a  savings
association  to have  at  least  65% of its  portfolio  assets  (as  defined  by
regulation)  in qualified  thrift  investments,  primarily  residential  housing
related loans and  investments.  At September 30, 1999,  Yonkers Savings met the
test and has always met the test since its effectiveness.

      Any savings  association that fails to meet the QTL test must convert to a
national bank charter,  unless it requalifies as a QTL and thereafter  remains a
QTL. If an  association  does not  requalify  and  converts  to a national  bank
charter,  it must remain  SAIF-insured  until the FDIC permits it to transfer to
the BIF.  If such an  association  has not yet  requalified  or  converted  to a
national  bank,  its  new  investments  and  activities  are  limited  to  those
permissible  for both a  savings  association  and a  national  bank,  and it is
limited to national bank branching  rights in its home state.  In addition,  the
association  is  immediately  ineligible  for  additional  FHLB  advances and is
subject to national  bank limits for payment of dividends.  If such  association
has not requalified or converted to a national bank within three years after the
failure,  it must  divest  of all  investments  and  cease  all  activities  not
permissible  for a  national  bank.  In  addition,  it must repay  promptly  any
outstanding  FHLB  advances,  which may result in prepayment  penalties.  If any
association  that fails the QTL test is  controlled by a holding  company,  then
within one year after the failure,  the holding  company must register as a bank
holding  company  and  become  subject  to  all  restrictions  on  bank  holding
companies. See "- Holding Company Regulation."

      COMMUNITY  REINVESTMENT ACT. Under the Community Reinvestment Act ("CRA"),
every FDIC insured  institution  has a  continuing  and  affirmative  obligation
consistent  with safe and sound banking  practices to help meet the credit needs
of its entire community,  including low and moderate, income neighborhoods.  The
CRA does not establish  specific lending  requirements or programs for financial
institutions nor does it limit an institution's  discretion to develop the types
of products  and  services  that it believes  are best suited to its  particular
community, consistent with the CRA. The CRA requires the OTS, in connection with
the  examination  of  Yonkers  Savings,  to assess the  institution's  record of
meeting the credit needs of its  community  and to take such record into account
in its evaluation of certain applications, such as a merger or the establishment
of a branch,  by Yonkers Savings.  An  unsatisfactory  rating may be used as the
basis for the denial of an application by the OTS.  Yonkers Savings was examined
for  CRA  compliance  by  the  OTS  in  June  1999  and  received  a  rating  of
satisfactory.

      TRANSACTIONS WITH AFFILIATES.  Generally,  transactions  between a savings
association or its  subsidiaries  and its affiliates are required to be on terms
as  favorable  to  the  association  as  transactions  with  non-affiliates.  In
addition,  certain of these  transactions,  such as loans to an  affiliate,  are
restricted to a percentage of the association's  capital.  Affiliates of Yonkers
Savings  include the Holding  Company and any  company  which,  is under  common
control with Yonkers Savings. In addition, a savings association may not lend to
any affiliate  engaged in activities not  permissible for a bank holding company
or  acquire  the  securities  of  most  affiliates.  Subsidiaries  of a  savings
association  are  generally  not  deemed  affiliates;  however,

                                       36
<PAGE>

the OTS has the  discretion to treat  subsidiaries  of savings  associations  as
affiliates on a case-by-case basis.

      Certain  transactions with directors,  officers or controlling persons are
also  subject to  conflict of interest  regulations  enforced by the OTS.  These
conflict of interest  regulations and other statutes also impose restrictions on
loans to such persons and their  related  interests.  Among other  things,  such
loans must be made on terms  substantially the same as for loans to unaffiliated
individuals.

      HOLDING COMPANY  REGULATION.  The Holding Company is a unitary savings and
loan holding  company  subject to regulatory  oversight by the OTS. As such, the
Holding  Company is required to register  and file  reports  with the OTS and is
subject to  regulation  and  examination  by the OTS. In  addition,  the OTS has
enforcement  authority over the Holding Company and its non-savings  association
subsidiaries  (if any)  which  also  permits  the OTS to  restrict  or  prohibit
activities  that are determined to be a serious risk to the  subsidiary  savings
association.

      As a  unitary  savings  and loan  holding  company,  the  Holding  Company
generally  is not  subject to  activity  restrictions.  If the  Holding  Company
acquires  control of another savings  association as a separate  subsidiary,  it
would become a multiple savings and loan holding company,  and the activities of
the Holding Company and any of its  subsidiaries  (other than Yonkers Savings or
any  other  SAIF-insured  savings  association)  would  become  subject  to such
restrictions  unless  such  other  associations  each  qualify as a QTL and were
acquired in a supervisory acquisition.

      If Yonkers Savings fails the QTL test, the Holding Company must obtain the
approval of the OTS prior to continuing after such failure,  directly or through
its other  subsidiaries,  any business  activities other than those approved for
multiple savings and loan holding companies or their subsidiaries.  In addition,
within one year of such failure the Holding  Company must  register as, and will
become subject to, the restrictions  applicable to bank holding  companies.  The
activities  authorized for a bank holding  company are more limited than are the
activities  authorized  for a  unitary  or  multiple  savings  and loan  holding
company. See "- Qualified Thrift Lender Test."

      The Holding  Company must obtain  approval  from the OTS before  acquiring
control of any other SAIF-insured  association.  Such acquisitions are generally
prohibited  if they  result  in a  multiple  savings  and loan  holding  company
controlling  savings  associations  in  more  than  one  state.   However,  such
interstate  acquisitions are permitted based on specific state  authorization or
in a supervisory acquisition of a failing savings association.

      FEDERAL  SECURITIES  LAW. The stock of the Holding  Company is  registered
with the SEC under the  Exchange  Act.  The  Holding  Company  is subject to the
information,   proxy  solicitation,   insider  trading  restrictions  and  other
requirements of the SEC under the Exchange Act.

                                       37
<PAGE>

      Holding  Company  stock  held by  persons  who are  affiliates  (generally
officers,  directors and principal  stockholders) of the Holding Company may not
be resold without  registration or unless sold in accordance with certain resale
restrictions.   If  the  Holding  Company  meets  specified  public  information
requirements,  each  affiliate  is able to sell in the  public  market,  without
registration, a limited number of shares in any three-month period.

      FEDERAL RESERVE SYSTEM.  The Federal Reserve Board requires all depository
institutions  to maintain  non-interest  bearing  reserves at  specified  levels
against  their  transaction  accounts  (primarily  checking,  NOW and  Super NOW
checking  accounts).  At September 30, 1999,  Yonkers  Savings was in compliance
with these  reserve  requirements.  The balances  maintained to meet the reserve
requirements  imposed  by the  Federal  Reserve  Board  may be used  to  satisfy
liquidity requirements that may be imposed by the OTS. See "- Liquidity."

      Savings  associations  are  authorized to borrow from the Federal  Reserve
Bank  "discount   window,"  but  Federal  Reserve  Board   regulations   require
associations to exhaust other reasonable alternative sources of funds, including
FHLB advances, before borrowing from the Federal Reserve Bank.

      FEDERAL HOME LOAN BANK SYSTEM.  Yonkers Savings is a member of the FHLB of
New York,  which is one of 12 regional FHLBs that  administer the home financing
credit  function  of  savings  associations.  Each FHLB  serves as a reserve  or
central bank for its members within its assigned region.  It is funded primarily
from  proceeds  derived from the sale of  consolidated  obligations  of the FHLB
System.  It makes loans to members (i.e.,  advances) in accordance with policies
and  procedures  established  by the board of directors  of the FHLB,  which are
subject to the oversight of the Federal Housing Finance Board. All advances from
the FHLB are required to be fully secured by sufficient collateral as determined
by the FHLB. In addition,  all long-term  advances are required to provide funds
for residential home financing.

      As a member, Yonkers Savings is required to purchase and maintain stock in
the FHLB of New York. At September 30, 1999,  Yonkers  Savings held $7.4 million
in FHLB stock, which was in compliance with this requirement.  Dividends paid by
the FHLB of New York to the  Association  totaled  $450,000  for the year  ended
September 30, 1999, representing an increase of $112,000 from dividends received
in fiscal 1998.

TAXATION

      FEDERAL.   The  Association   and  the  Holding  Company   currently  file
consolidated  federal  income tax returns.  These  returns are filed on a fiscal
year basis, as of September 30, using the accrual method of accounting.

                                       38
<PAGE>

      Savings  associations  such as the  Association are permitted to establish
reserves for bad debts and to make annual additions  thereto which,  may, within
specified  formula limits,  be taken as a deduction in computing  taxable income
for federal  income tax purposes.  The amount of the bad debt reserve  deduction
for  "non-qualifying  loans" is computed under the experience method. The amount
of  the  bad  debt  reserve  deduction  for  "qualifying  real  property  loans"
(generally  loans secured by improved  real estate) is also  computed  under the
experience  method.  Under the experience method, the bad debt reserve deduction
is an amount  determined  under a  formula  based  generally  upon the bad debts
actually  sustained  by  the  savings   association  over  a  period  of  years.
Historically,  a  percentage  of taxable  income  method was also  available  in
computing the qualifying  loan bad debt deduction;  however,  under 1996 federal
tax  legislation,  this method is no longer available to the Association for tax
years ending on or after September 30, 1997.

      The 1996 federal tax  legislation  also imposed a requirement to recapture
into  taxable  income the  portion of the  qualifying  and  non-qualifying  loan
reserves  in  excess  of the  "base-year"  balances  of such  reserves.  For the
Association,  the base-year  reserves are the balances as of September 30, 1988.
Recapture of the excess  reserves will occur over a six-year  period which began
for the  Association in the tax year ending  September 30, 1999. The Association
previously established,  and will continue to maintain, a deferred tax liability
with  respect to its  federal tax bad debt  reserves in excess of the  base-year
balances;  accordingly,  the  legislative  changes  will have no effect on total
income tax expense for financial reporting purposes.

      Also, under the 1996 legislation,  the Association's base-year federal tax
bad debt  reserves are "frozen"  and subject to current  recapture  only in very
limited circumstances. Generally, recapture of all or a portion of the base-year
reserves  will be required if the  Association  pays a dividend in excess of the
greater of its current or accumulated  earnings and profits,  redeems any of its
stock, or is liquidated.  The Association has not established a deferred federal
tax  liability  under  SFAS  No.  109 for its  base-year  federal  tax bad  debt
reserves,  as it does not anticipate  engaging in any of the  transactions  that
would cause such reserves to be recaptured.

      In addition to the regular income tax, corporations  generally are subject
to a minimum tax. An alternative minimum tax is imposed at a minimum tax rate of
20% on alternative  minimum taxable income,  which is the sum of a corporation's
regular taxable income (with certain adjustments) and tax preference items, less
any available exemption. The alternative minimum tax is imposed to the extent it
exceeds the  corporation's  regular  income tax,  and net  operating  losses can
offset no more than 90% of alternative  minimum taxable income.  The Association
and the Company have not been subject to the alternative minimum tax.

      The Association has been audited by the IRS with respect to federal income
tax  returns  through  September  30,  1991,  and  all  deficiencies  have  been
satisfied.  In the opinion of management,  any examination of still open returns
would not result in a deficiency,  which could have a material adverse effect on
the financial condition of the Company.

                                       39
<PAGE>

      NEW YORK STATE.  The Association  and the Holding  Company  currently file
combined  New York State tax  returns on a fiscal  year  basis.  The  Company is
subject to the New York State Franchise Tax on Banking Corporations in an annual
amount  equal to the greater of (i) 9% of "entire net income"  allocable  to New
York State during the taxable year, or (ii) the applicable  alternative  minimum
tax. The  alternative  minimum tax is generally  the greater of (a) 0.01% of the
value of assets allocable to New York State with certain  modifications,  (b) 3%
of  "alternative  entire net income"  allocable to New York State,  or (c) $250.
Entire  net income is similar  to  federal  taxable  income,  subject to certain
modifications  (including  the fact that net operating  losses cannot be carried
back or carried  forward).  In addition,  New York also  imposes a  Metropolitan
Commuter Transportation District surcharge of 17% that is assessed on the amount
of the New York State Franchise tax.

      In July 1996,  New York State enacted  legislation  to preserve the use of
the percentage of taxable  income bad debt deduction for state tax purposes.  In
general,  the  legislation  provides  for  a  deduction  equal  to  32%  of  the
Association's  New  York  State  taxable  income,  which  is  comparable  to the
deductions  permitted  under the prior  Federal tax law.  The  legislation  also
provides for a floating base year,  which will allow the  Association  to change
from the percentage of taxable  income method to the  experience  method without
recapture of any reserve. Previously, the Association had established a deferred
New York State tax  liability  for the excess of its New York State tax bad debt
reserves over the amount of its base-year New York State reserves. Since the new
legislation  effectively  eliminated  the  reserves  in excess of the  base-year
balances,  the Company  reduced its deferred tax  liability by $100,000  (with a
corresponding  reduction  in  income  tax  expense)  during  the  quarter  ended
September 30, 1996.

      Generally,  New York  State tax law has  requirements  similar  to federal
requirements  regarding the recapture of base-year  tax bad debt  reserves.  One
notable  exception is that,  after the 1996  legislation,  New York continues to
require  that at least 60% of the  Association's  assets  consist  of  specified
assets  (generally,  loans  secured  by  residential  real  estate or  deposits,
educational  loans, cash and certain  government  obligations).  The Association
expects to continue to meet the 60% requirement and does not anticipate engaging
in any of the  transactions,  which would  require  recapture  of its  base-year
reserves  (such as changing to a commercial  bank charter).  Accordingly,  under
SFAS No. 109, it has not provided any deferred tax liability on such reserves.

       DELAWARE.  As a Delaware  company,  the Company is exempted from Delaware
corporate  income tax but is required  to file an annual  report with and pay an
annual fee to the State of  Delaware.  The Company is also  subject to an annual
franchise tax imposed by the State of Delaware.

ITEM 2.   PROPERTIES

      The  following  table  sets forth  information  concerning  the  Company's
properties  at September 30, 1999.  The Company's  premises had an aggregate net
book value of approximately $367,000 at that date.

                                       40
<PAGE>

                                  Year           Owned or    Net Book Value at
         Location            Acquired/Leased      Leased    September 30, 1999
---------------------------  ----------------  -----------  ------------------
                                         (Dollars in thousands)
CORPORATE HEADQUARTERS:
6 Executive Plaza               1996             Leased            $ 125
Yonkers, New York
10701-9858

MAIN OFFICE:
One Manor House Square          1976              Owned              124
Yonkers, New York
10701-2701

FULL-SERVICE BRANCHES:

780 Palisade Avenue             1989              Leased              41
Yonkers, New York  10703

1759 Central Park Avenue        1977              Leased              44
Yonkers, New York 10710-2828

2320 Central Park Avenue        1986              Leased              33
Yonkers, New York
10710-1216

IN-STORE BRANCHES:

1357 Route 9
Wappingers Falls, New            1997             Leased              --
York  12590

3303 Crompond Road.
Yorktown Heights, New York       1998             Leased              --
10598

240 East Sanford Boulevard
Mt. Vernon, New York  10550      1999             Leased              --

432 South Road, Route 9
Poughkeepsie, New York  12601    1999             Leased              --


      Yonkers Savings has entered into an agreement for in-store  branching with
BJ's  Wholesale  Club,  Inc. An in-store  branch opened in December 1997 in BJ's
location in  Wappingers  Falls,  New York; a second  in-store  branch  opened in
October 1998 in Yorktown Heights, New York. The Association's agreement gives it
the  right of first  refusal  to  establish  an  in-store  branch in any of BJ's
remaining or future clubs located in Dutchess, Putnam, Rockland, and Westchester
Counties,  New York. In addition, in May 1999 a third in-store branch was opened
in a  supermarket  in Mt.  Vernon,  New York and a fourth  was opened in a super
market in Poughkeepsie, New York.

      The Company  believes  that its current  facilities  are  adequate to meet
present  needs.  In the  future,  the  Company  intends to  continue  to explore
branching  opportunities  to the  extent  they  develop,  although  no  specific
proposals are  currently  under  consideration,  other than the  possibility  of
additional in-store branches under the agreement described above.

                                       41
<PAGE>

      The Company's  depositor and borrower  customer files are maintained by an
independent  data  processing  company.  The  net  book  value  of the  computer
equipment  utilized  by the  Company at  September  30,  1999 was  approximately
$335,000.

ITEM 3.   LEGAL PROCEEDINGS

       The  Company is involved  as  plaintiff  or  defendant  in various  legal
proceedings  arising in the normal  course of its  business.  While the ultimate
outcome of these various legal  proceedings  cannot be predicted with certainty,
it is the opinion of  management  that the  resolution  of these  legal  actions
should not have a material effect on the Company's financial  position,  results
of operations or liquidity.

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

      No  matter  was  submitted  to a vote of  security  holders,  through  the
solicitation  of proxies or otherwise,  during the quarter  ended  September 30,
1999.


                                    PART II


ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      Page 41 of the  attached  1999  Annual  Report to  Stockholders  is herein
incorporated by reference.

ITEM 6.   SELECTED FINANCIAL DATA

      Pages 5 and 6 of the  attached  1999  Annual  Report to  Stockholders  are
herein incorporated by reference.

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

      Pages 7 through 19 of the attached 1999 Annual Report to Stockholders  are
herein incorporated by reference.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      The section "Interest Rate Risk Management",  appearing on pages 15 and 16
of the attached 1999 Annual Report to  Stockholders,  is herein  incorporated by
reference.

                                       42
<PAGE>

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      Pages 20 through 39 of the attached 1999 Annual Report to Stockholders are
herein incorporated by reference.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

      There has been no Current  Report on Form 8-K filed within 24 months prior
to the  date of the most  recent  financial  statements  reporting  a change  of
accountants and/or reporting disagreements on any matter of accounting principle
or financial statement disclosure.


                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS

      Information  concerning directors of the Registrant is incorporated herein
by  reference  from the  Company's  definitive  Proxy  Statement  for the Annual
Meeting  of  Stockholders  to be held in January  2000,  a copy of which will be
filed not later than 120 days after the close of the fiscal year.

EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS

      The  following  are the  Company's  executive  officers  who are not  also
directors as of September 30, 1999.

      JOSEPH L.  MACCHIA.  Mr.  Macchia,  age 48,  has been Vice  President  and
Secretary to the Association since 1991, and Vice President and Secretary of the
Holding  Company since its  formation.  Mr.  Macchia was named Chief  Operations
Officer in January 1997. Mr. Macchia is responsible for the Association's branch
administration,  consumer lending and savings operations. He is also responsible
for the  Association's  Bank  Secrecy Act  compliance.  Prior to such time,  Mr.
Macchia served as the Association's Vice President.
Mr. Macchia has been employed by the Association since 1972.

      JOSEPH D. ROBERTO. Mr. Roberto,  age 47, is the Vice President,  Treasurer
and Chief Financial Officer of the Holding Company, a position he has held since
its formation,  and is Vice President,  Treasurer and Chief Financial Officer of
the Association.  Mr. Roberto was appointed the Association's Vice President and
Treasurer  in  1991  and  Chief  Financial  Officer  in  1995.  Mr.  Roberto  is
responsible   for  the   Accounting   Department,   interest   rate   risk   and
asset/liability  management as well as financial  reporting.  Prior to 1991, Mr.
Roberto served as the  Association's  Secretary and  Treasurer.  Mr. Roberto has
been employed by the Association since 1973.

                                       43
<PAGE>

      PHILIP GUARNIERI.  Mr. Guarnieri,  age 42, is the Vice President and Chief
Lending Officer of the  Association.  Mr. Guarnieri was appointed Vice President
and Chief Lending Officer in July 1996.  Prior to joining the  Association,  Mr.
Guarnieri was the Vice President for loan  origination  at Home Federal  Savings
Bank,  Queens,  New York. Mr. Guarnieri is responsible for the administration of
the Association's real estate lending programs.


COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

       Section  16(a) of the Exchange Act requires the  Company's  directors and
executive  officers,  and persons who own more than 10% of a registered class of
the  Holding  Company's  equity  securities,  to file  with the SEC  reports  of
ownership  and reports of changes in  ownership of common stock and other equity
securities  of the Holding  Company.  Officers,  directors  and greater than 10%
stockholders  are required by SEC  regulation to furnish the Company with copies
of all Section 16(a) forms they file.

      To the Company's knowledge, based solely on a review of the copies of such
reports  furnished  to the  Company and  written  representations  that no other
reports were  required  during the fiscal year ended  September  30,  1999,  all
Section 16(a) filing  requirements  applicable  to its  officers,  directors and
greater than 10 percent beneficial owners were met.

ITEM 11.  EXECUTIVE COMPENSATION

      Information  concerning  executive  compensation is incorporated herein by
reference  from  the  definitive  Proxy  Statement  for the  Annual  Meeting  of
Stockholders to be held in January 2000, a copy of which will be filed not later
than 120 days after the close of the fiscal year.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      Information concerning security ownership of certain beneficial owners and
management  is  incorporated  herein  by  reference  from the  definitive  Proxy
Statement for the Annual Meeting of  Stockholders  to be held in January 2000, a
copy of which  will be filed  not  later  than 120 days  after  the close of the
fiscal year.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information   concerning  certain  relationships  and  related  transactions  is
incorporated  herein by reference  from the definitive  Proxy  Statement for the
Annual Meeting of  Stockholders to be held in January 2000, a copy of which will
be filed not later than 120 days after the close of the fiscal year.

                                       44
<PAGE>

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A) (1)  FINANCIAL STATEMENTS

       The following  information  appearing in the Company's 1999 Annual Report
to Stockholders is herein incorporated by reference

ITEM                                                  PAGES IN ANNUAL REPORT
Independent Auditors' Report                          Page 40

Consolidated  Balance Sheets as of September 30,      Page 20
1999 and 1998

Consolidated Statements of Income for the Years       Page 21
 Ended September 30, 1999, 1998 and 1997

Consolidated    Statements    of    Changes   in      Page 22
Stockholders' Equity for the Years Ended
  September 30, 1999, 1998 and 1997

Consolidated  Statements  of Cash  Flows for the      Page 23
Years Ended September 30, 1999, 1998 and 1997

Notes to Consolidated Financial Statements            Pages 24 through 39

      (A) (2)  FINANCIAL STATEMENT SCHEDULES

      All  financial  statement  schedules  have been  omitted  as the  required
information is not applicable or has been included in the Consolidated Financial
Statements.

                                       45

<PAGE>

      (A) (3)  EXHIBITS
--------------------------------------------------------------------------------
                                                             SEQUENTIAL PAGE
                                           REFERENCE TO        NUMBER WHERE
                                           PRIOR FILING     ATTACHED EXHIBITS
 REGULATION                                 OR EXHIBIT     ARE LOCATED IN THIS
 S-K EXHIBIT                             NUMBER ATTACHED        FORM 10-K
    NUMBER                 DOCUMENT          HERETO              REPORT
--------------------------------------------------------------------------------
3(a)    Certificate of Incorporation                 *            Not applicable

3(b)    By-Laws                                      **           Not applicable

 4      Instruments defining the rights of           *            Not applicable
        security holders,
         including debentures

 9      Voting Trust Agreement                      None          Not applicable

10      Material Contracts

          Employment Contract                        ***          Not applicable

        Management Recognition Plan and Stock
            Option and Incentive Plan                *            Not applicable


        Change-in-Control Severance                  ***          Not applicable
        Agreements

11      Statement re: computation of per        Not required      Not applicable
        share earnings

12      Statement re: computation of ratios     Not required      Not applicable

13      Annual Report to Security Holders            13

16      Letter re: change in certifying             None          Not applicable
        accountants

18      Letter re: change in accounting             None          Not applicable
        principles

19      Previously unfiled documents                None          Not applicable

21      Subsidiaries of Registrant                   21

22      Published report regarding matters          None          Not applicable
        submitted to vote
         of security holders

23      Consents of Experts and Counsel              23

24      Power of Attorney                       Not required      Not applicable
27      Financial Data Schedule                      27

28      Information from reports furnished          None          Not applicable
        to state insurance
         regulatory authorities


99      Additional Exhibits                         None          Not applicable


      * Filed as exhibits to the Company's Form S-1 registration statement filed
on December 29, 1995 (File No. 33-81013) pursuant to Section 5 of the Securities
Act of 1933,  as amended.  All of such  previously  filed  documents  are hereby
incorporated herein by reference in accordance with Item 601 of Regulation S-K.

      ** Filed as  exhibits to the  Company's  Form 8-K  registration  statement
filed on July 29, 1999 (File No.  000-27716)  pursuant to Section 13 or 15(d) of
the Securities Act of 1934, as amended.  All of such previously  filed documents
are hereby  incorporated  herein by  reference in  acccordance  with Item 601 of
Regulation S-K.

     *** Filed as exhibits to the  Company's  Form 10-K  registration  statement
filed on December 28, 1998 (File No. 000-27716)  pursuant to Section 13 or 15(d)
of the  Securities  Act of  1934,  as  amended.  All of  such  previously  filed
documents are hereby  incorporated  herein by reference in acccordance with Item
601 of Regulation S-K.

      (B)  REPORTS ON FORM 8-K

      During the quarter ended September 30, 1999, the Company filed two current
Reports on Form 8-K. On July 29,  1999,  under Item 5, the Company  reported the
adoption  of amended and  restated  Bylaws and the  issuance of a press  release
announcing  the  Company's  earnings  for the quarter  ended June 30,  1999.  On
September 20, 1999,  under Item 5, the Company  reported the issuance of a press
release  announcing  its  intention to  repurchase  up to 265,000  shares of its
outstanding shares.

                                       46
<PAGE>


                                  SIGNATURES


      Pursuant to the  requirements of Section 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                    YONKERS FINANCIAL CORPORATION


                                    By:   /s/ Richard F. Komosinski
                                          --------------------------------------
                                          Richard F. Komosinski, President,
                                            Chief Executive Officer and Director
                                          (DULY AUTHORIZED REPRESENTATIVE)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed  below by the  following  persons in the  capacities  and on the
dates indicated.

/s/ Richard F. Komosinski                 /s/ William G. Bachop
-------------------------------------     --------------------------------------
Richard F. Komosinski, President,         William G. Bachop, Chairman
Chief    Executive    Officer    and
Director  (PRINCIPAL  EXECUTIVE  AND
OPERATING OFFICER)

Date: December    , 1999                  Date: December __, 1999

/s/ Michael J. Martin                     /s/ Charles D. Lohrfink
-------------------------------------     --------------------------------------
Michael J. Martin,  Director              Charles D. Lohrfink, Director

Date:                                     Date:


/s/ Donald R. Angelilli                   /s/ Eben T. Walker
-------------------------------------     --------------------------------------
Donald R. Angelilli, Director             Eben T. Walker, Director

Date:                                     Date:


/s/ P. Anthony Sarubbi                    /s/ Joseph D. Roberto
-------------------------------------     --------------------------------------
P. Anthony Sarubbi, Director              Joseph D. Roberto, Vice President,
                                           Treasurer   and   Chief    Financial
                                             Officer
                                          (PRINCIPAL  FINANCIAL AND  ACCOUNTING
Date:                                     OFFICER)

                                      Date: