FORM 10-Q.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

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

                                    FORM 10-Q

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

                  For the quarterly period ended June 30, 2000

                                       or

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

         For the transition period from _____________ to ______________


                         Commission File Number 0-22559

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

            DELAWARE                                              06-1481061
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

                    ONE SOUTH CHURCH ST., GOSHEN, N.Y. 10924
               (Address of principal executive offices) (Zip Code)

                                 (914) 294-6151
              (Registrant's telephone number, including area code)


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

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date:

Common Shares, $.01 par value                              1,984,538
-----------------------------                           ---------------
      (Title of class)                         (outstanding at August 14, 2000)


<PAGE>


                            GSB FINANCIAL CORPORATION
                                    FORM 10-Q
                                TABLE OF CONTENTS


INDEX

<TABLE>
<CAPTION>
PART I.    FINANCIAL INFORMATION                                                                                          Page
-------    ---------------------                                                                                          ----
<S>                                                                                                                       <C>
Item 1.    Financial Statements

           Consolidated Statements of Financial Condition as of
           June 30, 2000 (Unaudited) and December 31, 1999........................................................          3

           Consolidated Statements of Income for the three and six months ended
           June 30, 2000 and 1999 (Unaudited).....................................................................          4

           Consolidated Statements of Cash Flows for the six months ended June 30, 2000 and 1999 (Unaudited)......          5

           Notes to Unaudited Consolidated Interim Financial Statements...........................................          6

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

           Quantitative and Qualitative Disclosure about Market Risk..............................................         14

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

Item 1.    Legal Proceedings......................................................................................         14

Item 6.    Exhibits and Reports on Form 8-K.......................................................................         14

           Signatures.............................................................................................         18
</TABLE>


                                       2
<PAGE>


                    GSB Financial Corporation and Subsidiary

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                   (unaudited)
               (In thousands except shares and per share amounts)

<TABLE>
<CAPTION>
                                                                          June 30,   December 31,
                                                                           2000          1999
                                                                         ---------    ---------
<S>                                                                      <C>          <C>
ASSETS
     Cash and due from banks .........................................   $   3,064    $   4,052
     Federal funds sold ..............................................         100          100
                                                                         ---------    ---------
     Cash and cash equivalents .......................................       3,164        4,152

     Investment securities available for sale ........................      53,116       46,871
     Mortgage-backed securities:
       Held to maturity (estimated market values of $1,293 and
         $ 1,455 at June 30, 2000 and December 31, 1999, respectively)       1,321        1,471
       Available for sale ............................................       1,759        2,004
     Loans receivable, net ...........................................     120,624      115,273
     Banking house and equipment .....................................       3,159        2,768
     Accrued interest receivable .....................................       1,490        1,315
     Prepaid expenses and other assets ...............................       2,233        2,162
                                                                         ---------    ---------

          Total assets ...............................................   $ 186,866    $ 176,016
                                                                         =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
  Liabilities
    Deposits .........................................................   $ 108,987    $ 106,256
     Mortgagors' escrow deposits .....................................         727          503
    Federal funds purchased ..........................................       3,875        3,600
     Borrowings ......................................................      41,000       35,000
     Accrued expenses and other liabilities ..........................       2,888        1,548
                                                                         ---------    ---------
          Total liabilities ..........................................   $ 157,477    $ 146,907

  Commitments and contingent liabilities

  Stockholders'  Equity
     Preferred stock ($0.01 par value; 500,000 shares
        authorized; none issued) .....................................        --           --
     Common stock ($0.01 par value; 4,500,000 shares authorized;
        2,248,250 issued at June 30, 2000 and December 31, 1999) .....          22           22
     Additional paid-in capital ......................................      21,489       21,575
     Retained earnings, substantially restricted .....................      15,085       14,518
     Accumulated other comprehensive income ..........................      (1,365)      (1,297)
     Treasury stock, at cost .........................................      (4,025)      (4,052)
     Unearned ISAP stock .............................................        (558)        (308)
     Unallocated ESOP stock ..........................................      (1,259)      (1,349)
                                                                         ---------    ---------
          Total stockholders' equity .................................   $  29,389    $  29,109
                                                                         ---------    ---------
          Total liabilities and stockholders' equity .................   $ 186,866    $ 176,016
                                                                         =========    =========
</TABLE>

          See accompanying notes to consolidated financial statement.


                                       3
<PAGE>

                    GSB Financial Corporation and Subsidiary
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
               (In thousands except shares and per share amounts)

<TABLE>
<CAPTION>
                                                           For the Quarter Ended   For the Six Months Ended
                                                                 June 30,                 June 30,
                                                         -----------------------   -----------------------
                                                            2000         1999         2000         1999
                                                         ----------   ----------   ----------   ----------
<S>                                                      <C>          <C>          <C>          <C>
INTEREST INCOME
   Loans .............................................   $    2,222   $    1,791   $    4,375   $    3,404
   Federal funds sold ................................            9           10           16           64
   Investment securities .............................          881          678        1,752        1,215
   Mortgage-backed securities ........................           55           88          113          195
                                                         ----------   ----------   ----------   ----------
     Total interest income ...........................        3,167        2,567        6,256        4,878

INTEREST EXPENSE
   Deposit accounts ..................................        1,030          886        2,030        1,750
   Other borrowings ..................................          659          292        1,241          458
                                                         ----------   ----------   ----------   ----------
     Total interest expense ..........................        1,689        1,178        3,271        2,208
   Net interest income ...............................        1,478        1,389        2,985        2,670
   Provision for loan losses .........................           25           20           50           35
                                                         ----------   ----------   ----------   ----------
   Net interest income after provision for loan losses        1,453        1,369        2,935        2,635

NON-INTEREST INCOME
   Service charges on deposit accounts ...............           50           44           94           88
   Other income ......................................           39           33           77           61
   Net realized gains on securities ..................          138         --            138         --
                                                         ----------   ----------   ----------   ----------
     Total non-interest income .......................          227           77          309          149

NON-INTEREST EXPENSE
   Salaries and employee benefits ....................          467          401          894          781
   Occupancy and equipment ...........................           85           79          176          173
   Data processing expenses ..........................           74           67          152          143
   Other non-interest expense ........................          407          328          709          639
                                                         ----------   ----------   ----------   ----------
     Total non-interest expense ......................        1,033          875        1,931        1,736
                                                         ----------   ----------   ----------   ----------

   Income before income taxes ........................          647          571        1,313        1,048
   Income tax expense ................................          245          228          509          412
                                                         ----------   ----------   ----------   ----------

   Net income ........................................   $      402   $      343   $      804   $      636
                                                         ==========   ==========   ==========   ==========

   Basic earnings per share ..........................   $     0.23   $     0.18   $     0.45   $     0.33
   Weighted average shares outstanding - basic .......    1,781,024    1,895,619    1,786,620    1,910,956
   Diluted earnings per share ........................   $     0.22   $     0.18   $     0.44   $     0.33
   Weighted average shares outstanding - diluted .....    1,809,568    1,911,892    1,806,227    1,925,397
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       4
<PAGE>

                            GSB FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                      Six Months Ended June 30,
                                                                                    ----------------------------
                                                                                        2000            1999
                                                                                    ------------    ------------
                                                                                            (In Thousands)
<S>                                                                                 <C>             <C>
Cash flows from operating activities:
Net income (loss) ...............................................................   $        804    $        636
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation ....................................................................             95              86
Provision for loan losses .......................................................             50              35
Fair value provision of ESOP & ISAP shares committed to be released .............            166             161
Gain in maturity/redemption of investment securities available for sale .........           (138)           --
Increase (decrease) other assets ................................................            (24)           (700)
Net amortization on investment securities -  available for sale .................             (5)             25
Net amortization (accretion) on mortgage - backed
  Securities - held to maturity .................................................             (5)             (7)
Net amortization (accretion) on mortgage - backed
  Securities - available for sale ...............................................              2              10
Increase (decrease) in accrued expenses and other liabilities ...................          1,340           1,060
                                                                                    ------------    ------------

Net cash provided by operating activities .......................................          2,285           1,306
                                                                                    ------------    ------------

Cash flows from investing activities:

Proceeds from principal paydowns of mortgage - backed
  Securities -  held to maturity ................................................            154             467
Purchase of mortgage-backed securities - held to ................................           --              --
maturity
Proceeds from principal paydowns of mortgage - backed
  Securities - available for sale ...............................................            136           1,376
Proceeds from maturity and redemption of investment
  Securities - available for sale ...............................................          1,950           4,200
Proceeds from sale of investment securities - available for sale ................            185            --
Purchase of investment securities - available for sale ..........................         (8,355)        (17,785)
Net (increase) in loans .........................................................         (5,401)        (21,436)
Capital expenditures ............................................................           (486)            (74)
Proceeds from sale of other real estate owned ...................................           --              --
                                                                                    ------------    ------------
Net cash provided (used) by investing activities ................................        (11,817)        (33,252)
                                                                                    ------------    ------------

Cash flow from financing activities:
Net increase (decrease) in demand, statement passbook, money
  Market and NOW deposit accounts ...............................................          2,731           6,882
Proceeds from borrowings ........................................................          6,000          20,000
Proceeds from purchased federal funds ...........................................            275            --
Dividends paid ..................................................................           (238)           (148)
Purchase of treasury stock ......................................................           (448)         (1,276)
Increase (decrease) in advances from borrowers for taxes
  And insurance .................................................................            224             300
                                                                                    ------------    ------------
Net cash provided by ( used in) financing activities ............................          8,544          25,758
                                                                                    ------------    ------------

Net increase (decrease) in cash and cash equivalents ............................           (988)         (6,188)
Cash and cash equivalents at beginning of year ..................................          4,152           8,254
                                                                                    ------------    ------------
Cash and cash equivalents at end of year ........................................   $      3,164    $      2,066
                                                                                    ============    ============

Additional Disclosures:

Supplemental disclosures of cash flows information-cash paid during year for:
     Interest on other borrowings ...............................................   $      1,151    $        334
     Income taxes ...............................................................            643             708

Supplemental schedule of non-cash investing activities:

Change in unrealized gains & losses in investment securities -
  Available for sale ............................................................           (113)           (832)
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       5
<PAGE>

GSB Financial Corporation
Notes to Unaudited Consolidated Interim Financial Statements

1.   Basis of Presentation

The consolidated financial statements included herein at or for periods ended
June 30, 2000 and 1999, have been prepared by the Company without audit. In the
opinion of management, the quarterly unaudited financial statements include all
adjustments, consisting of normal recurring accruals, necessary for a fair
presentation of the consolidated financial position and results of operations
for the periods presented. Certain information and footnote disclosures normally
included in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission. The Company believes that the disclosures are adequate to
make the information presented not misleading, however, the results for the
periods presented are not necessarily indicative of the results to be expected
for the entire year.

The unaudited quarterly financial statement presented herein should be read in
conjunction with the annual audited consolidated financial statements of the
Company for the fiscal year ended December 31, 1999. Significant intercompany
transactions and amounts have been eliminated.

2.   Earnings Per Share

On July 9, 1997, GSB Financial Corporation completed its initial stock offering
of 2,248,250 shares of common stock. Concurrent with the offering, approximately
8% of the shares sold (179,860) were purchased by the GSB Financial Corporation
Employee Stock Ownership Plan ("ESOP") using the proceeds of a loan from the
Company to the ESOP. Through June 30, 2000, 53,958 shares have been committed to
be released from the lien of the ESOP loan and under AICPA Statement of Position
93-6; these shares are considered outstanding for purposes of calculating per
share amounts. Basic earnings per share excludes dilution and is computed by
dividing income available to common stockholders by the weighted average number
of common shares outstanding for the period. Unvested restricted stock is not
considered outstanding and is included in the computation of basic earnings per
share as of the date shares are fully vested. Diluted earnings per share
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
entity, such as the Company's restricted stock and stock options.

The calculations of basic and diluted earnings per share (EPS) for the periods
indicated, are included in exhibit 11 of this report.


                                       6
<PAGE>

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

General

GSB Financial Corporation (the "Company") was formed in March 1997 to acquire
the common stock of Goshen Savings Bank (the "Bank") upon its conversion from a
mutual savings bank to a stock savings bank. On July 9, 1997, the Company
completed its initial public offering, issuing 2,248,250 shares of $0.01 par
value common stock at $10.00 per share. Net proceeds to the Company were $21.4
million after conversion costs, and $19.6 million excluding the shares acquired
by the Company's Employee Stock Ownership Plan (the "ESOP"), which were
purchased with the proceeds of a loan from the Company. All references to the
Company prior to July 9, 1997, except where otherwise indicated, are to the
Bank.

Since the conversion, we have worked to implement our strategy of operating the
Bank as a community-based financial institution offering core financial services
to individuals and businesses in strategic locations within the Hudson Valley,
while exploring appropriate opportunities to leverage the additional capital
obtained in the Conversion. The Company has improved its customer service
delivery capability, enabling it to provide better services to existing
customers and seek to expand its customer base. The Company attracts deposits
from its local communities and invests those deposits principally in one-to-four
family residential mortgage loans, commercial mortgages and other business
loans. Management seeks to maintain a high quality loan portfolio with low
levels of delinquencies and non-performing assets by concentrating on
residential mortgage loans and real estate secured business loans in its local
community. Management also considers other loan types consistent with its
mission to serve the local consumer and business community.

The Bank is a federal savings bank with deposits insured by the Bank Insurance
Fund ("BIF") of the FDIC. The Bank's primary federal banking regulator is the
Office of Thrift Supervision ("OTS").

Our profitability depends principally on net interest income, which is the
difference between the income earned on loans and investments and our cost of
funds, principally interest paid on deposits and borrowings. Results of
operations are also affected by our provision for loan losses. Other sources of
income include deposit account fees, loan and loan servicing fees, gains on the
sale of securities, capital gain distributions on mutual fund investments, and
fees for banking services such as safe deposit boxes. The largest category of
non-interest expense is compensation and benefits expense. Other principal
categories of non-interest expense include occupancy expense, data processing
costs, advertising and marketing expenses, and insurance costs. Results of
operations are also significantly affected by general economic and competitive
conditions, particularly changes in market interest rates, government policies
and actions of regulatory authorities.



                                       7
<PAGE>

Average Balances, Interest Rates and Yield

     The following table presents, for the periods indicated, the total dollar
amount of interest income from average interest-earning assets and the resultant
yields, as well as the interest expense on average interest-bearing liabilities,
expressed both in dollars and rates. No tax equivalent adjustments were made.
Average balances are daily average balances. Non-interest-bearing checking
accounts are included in the tables as a component of non-interest-bearing
liabilities.


<TABLE>
<CAPTION>
                                                                        For  the Three Months Ended June 30,
                                               ------------------------------------------------------------------------------------
                                                                2000                                         1999
                                               ----------------------------------------    ----------------------------------------
                                                                             Average                                     Average
                                                Average                       Yield/         Average                      Yield/
                                                Balance       Interest       Cost (5)        Balance       Interest      Cost (5)
                                               -----------   -----------   ------------    -----------    -----------   -----------
                                                                             (Dollars in Thousands)
<S>                                           <C>           <C>                   <C>     <C>            <C>                  <C>
Interest-earnings assets:
Loans receivable (1) ......................   $   119,557   $     2,222           7.43%   $    98,888    $     1,791          7.24%
Mortgage-backed securities ................         3,283            55           6.70          5,330             88          6.60
Investment securities .....................        52,088           881           6.77         42,103            678          6.44
Federal funds sold ........................           542             9           6.64          1,186             10          3.37
                                              -----------   -----------                   -----------    -----------
    Total interest-earning assets .........       175,470         3,167           7.22        147,507          2,567          6.96
                                                            -----------                                  -----------
Non-interest-earning assets ...............         6,709                                       6,450
                                              -----------                                 -----------
     Total assets .........................   $   182,179                                 $   153,957
                                              ===========                                 ===========
Interest-bearing liabilities:
Savings accounts ..........................   $    32,758           249           3.04    $    30,625            235          3.07
Certificates of deposit ...................        44,216           560           5.07         41,746            490          4.69
Money market ..............................        16,358           179           4.38         13,572            125          3.68
NOW accounts ..............................         7,521            42           2.23          6,156             36          2.34
Other .....................................        42,358           659           6.22         22,812            292          5.12
                                              -----------   -----------                   -----------    -----------
    Total interest-bearing liabilities ....       143,211         1,689           4.72        114,911          1,178          4.10
                                                            -----------                                  -----------
Non-interest-bearing liabilities ..........         9,989                                       8,119
                                              -----------                                 -----------
    Total liabilities .....................       153,200                                     123,030
Equity ....................................        28,979                                      30,927
                                              -----------                                 -----------
     Total liabilities and equity .........   $   182,179                                 $   153,957
                                              ===========                                 ===========

Net interest income/spread (2).(3) ........                 $     1,478           2.50%                  $     1,389          2.86%
                                                            ===========    ===========                   ===========   ===========
Net earning assets/net interest margin (4)    $    32,259                         3.37%   $    32,596                         3.77%
                                              ===========                  ===========    ===========                  ===========
Ratio of average interest-earning assets
    to average interest-bearing liabilities                        1.23x                                        1.28x
                                                                   ====                                         ====
</TABLE>

(1)  Average balances include non-accrual loans. Interest on such loans is
     recognized as and when received.

(2)  Includes interest-bearing deposit in other financial institutions.

(3)  Interest-rate spread represents the difference between average yield on
     interest-earning assets and the average cost of interest-bearing
     liabilities.

(4)  Net yield on interest-earning assets ("net interest margin") represents net
     interest income as a percentage of average interest-earning assets.

(5)  Yields for the three month periods have been annualized when appropriate.



                                       8
<PAGE>

<TABLE>
<CAPTION>
                                                                     For  the Six Months Ended June 30,
                                               ------------------------------------------------------------------------------------
                                                                2000                                         1999
                                               ----------------------------------------    ----------------------------------------
                                                                             Average                                     Average
                                                Average                       Yield/         Average                      Yield/
                                                Balance       Interest       Cost (5)        Balance       Interest      Cost (5)
                                               -----------   -----------   ------------    -----------    -----------   -----------
                                                                             (Dollars in Thousands)
<S>                                           <C>           <C>                   <C>     <C>            <C>                  <C>
Interest-earnings assets:
Loans receivable (1) ......................   $   117,956   $     4,375           7.42%   $    94,055    $     3,404          7.24%
Mortgage-backed securities ................         3,375           113           6.70          5,876            195          6.64
Investment securities .....................        51,263         1,752           6.84         38,282          1,215          6.35
Federal funds sold ........................           916            16           3.49          3,054             64          4.19
                                              -----------    -----------                  -----------    -----------
    Total interest-earning assets .........       173,510         6,256           7.21        141,267          4,878          6.91
                                                             -----------                                 -----------
Non-interest-earning assets ...............         6,090                                       6,509
                                              -----------                                 -----------
     Total assets .........................   $   179,600                                 $   147,776
                                              ===========                                 ===========
Interest-bearing liabilities:
Savings accounts ..........................   $    32,247           484           3.00    $    29,900            451          3.02
Certificates of deposit ...................        44,948         1,113           4.95         41,711            983          4.71
Money market ..............................        16,091           353           4.39         13,493            248          3.68
NOW accounts ..............................         7,154            80           2.24          5,945             68          2.29
Other .....................................        40,758         1,241           6.09         17,889            458          5.12
                                              -----------   -----------                   -----------    -----------
    Total interest-bearing liabilities ....       141,198         3,271           4.63        108,938          2,208          4.05
                                                            -----------                                  -----------
Non-interest-bearing liabilities ..........         9,459                                       7,663
                                              -----------                                 -----------
    Total liabilities .....................       150,657                                     116,601
Equity ....................................        28,943                                      31,175
                                              -----------                                 -----------
     Total liabilities and equity .........   $   179,600                                 $   147,776
                                              ===========                                 ===========

Net interest income/spread (2).(3) ........                 $     2,985           2.58%                 $     2,670          2.86%
                                                            ===========    ===========                  ===========   ===========
Net earning assets/net interest margin (4)    $    32,312                        3.44%    $    32,329                        3.78%
                                              ===========                 ===========     ===========                 ===========
Ratio of average interest-earning assets
    to average interest-bearing liabilities                       1.23x                                       1.30x
                                                                  ====                                        ====
</TABLE>

(1)  Average balances include non-accrual loans. Interest on such loans is
     recognized as and when received.

(2)  Includes interest-bearing deposit in other financial institutions.

(3)  Interest-rate spread represents the difference between average yield on
     interest-earning assets and the average cost of interest-bearing
     liabilities.

(4)  Net yield on interest-earning assets ("net interest margin") represents net
     interest income as a percentage of average interest-earning assets.

(5)  Yields for the six month periods have been annualized when appropriate.


                                       9
<PAGE>

Comparison of Financial Condition at June 30, 2000 and December 31, 1999

Total assets were $186.9 million at June 30, 2000 as compared to $176.0 million
at December 31, 1999, representing 6.2% growth in assets. The growth was a
result of the Company's efforts to leverage its capital, partially offset by the
use of funds to repurchase stock. Loans, net increased $5.4 million, or 4.6%,
from $115.3 million to $120.1 million. Residential loans increased by $5.1
million because of origination efforts at a time of slower residential mortgage
loan demand due to rising interest rates. Investment securities available for
sale increased by $6.2 million, while mortgage-backed securities decreased by
$395,000, since December 31, 1999. The increase in investment securities was
principally due to the purchase of securities with borrowings to increase
leverage. The decrease in mortgage-backed securities was mainly due to scheduled
principal payments. Deposits increased by $2.7 million or 2.6% to $109.0 million
at June 30, 2000 as compared to $106.3 million at December 31, 1999. The
increase includes a $2.1 million increase in deposits in the Harriman branch
during the six months. Core deposits (representing deposits other than
certificates of deposit) increased by $4.2 million to $64.8 million at June 30,
2000, as compared to $60.6 million at December 31, 1999, which is attributed to
the Company's emphasis on attracting core deposit relationships through its
advertising.

Total equity increased to $29.4 million at June 30, 2000, from $29.1 million at
December 31, 1999. The $280,000 increase in equity resulted principally from net
income of $804,000; offset by stock repurchases, dividends, and an increase in
unrealized securities losses, but increased by the net effect of various
transactions related to the Company's stock-based compensation plans. The
Company is no longer subject to the Office of Thrift Supervision rules limiting
stock repurchases. The Company is not currently engaged in stock repurchases.

Comparison of Operating Results For the Three and Six Months Ended June 30, 2000
and 1999

Interest Income was $3.2 million for the second quarter of fiscal 2000 as
compared to $2.6 million for the same period in 1999, an increase of $600,000 or
23.4%. For the six months ended June 30, 2000, interest income amounted to $6.3
million as compared to $4.9 million for the same period in 1999. The increase in
the quarterly interest income was primarily volume related due to a $28.2
million, or 18.3%, increase in average earning assets, augmented by a 26 basis
point increase in the average yield on earnings assets. The increase in the six
months interest income was primarily volume related due to a $32.2 million, or
22.8%, increase in average earning assets, augmented by a 30 basis point
increase in the average yield on earnings assets.

Our aggressive efforts to increase our loan portfolio resulted in increases of
$20.7 million for the three month period and $23.9 million for the six month
period in the average balance of loans. These increases were the principal
contributor to our $431,000 and $971,000 increases in interest income on loans
in the three and six month periods. Increases in average rates earned on loans
also had a positive, but much less significant, effect on interest income. The
yields on our loans increased as we sought to increase levels of higher-yielding
commercial loans. In addition, new residential mortgage loans were originated at
higher rates because of higher market rates, and the yields on adjustable rate
loans increased for the same reason. Interest income on investment securities
increased by $203,000 for the quarter, due to increases in the average balances
of $10.0 million for the period. Interest income on investment securities
increased by $537,000 for the six months, due to increases in the average
balances of $13.0 million for the period. The Company borrowed funds and
invested those funds in investment securities to leverage its balance sheet. The
average yield earned on investment securities increased by 33 and 49 basis
points in the comparable periods, caused by higher market interest rates and
because the purchase of callable


                                       10
<PAGE>

government agency bonds which tend to have a higher market interest rate than
U.S. Treasury securities. Interest earned on mortgage-backed securities
decreased by $33,000 and $82,000 due to a $2.0 million and $2.5 million decrease
in the average balance of mortgage-backed securities in the comparable periods
resulting from accelerated principal payments. Interest earned on federal funds
sold decreased by $48,000 for the six months ended June 30, 2000, compared to
the same period in 1999, due to decreases in the average balances of $2.1
million. The reason for the decrease in average balances was that liquid assets
previous sold in the federal funds market were invested in loans as loan growth
exceeded the growth in deposits.

Interest Expense was $1.7 million for the quarter ended June 30, 2000 as
compared to $1.2 million for the same quarter in 1999. For the six months ended
June 30, 2000, interest expense totaled $3.3 million compared to $2.2 million
for the same period last year. The primary cause of the increases was an
increase in the average balance of borrowings undertaken to fund asset growth
and improve leverage. Borrowings, which are the Company's highest cost funding
source, increased from an average balance of $22.8 million and $17.9 million in
the quarter and six months ended June 30, 1999 to $42.4 million and $40.8
million in the comparable 2000 periods. The average cost of borrowings also
increased by 110 and 97 basis points between the respective periods due to an
increase in market rates. The $367,000 and $ 783,000 increase in interest paid
on borrowings represented more than 70% of the total $511,000 and $1.1 million
increase in interest paid.

Interest paid on deposits increased by $144,000 from the 1999 to the 2000
quarters because average interest bearing deposits increased by $8.8 million,
and the average rate paid on deposits increased by 25 basis points. Interest
paid on deposits increased for the six months ended June 30, 2000 compared to
June 30, 1999, by $280,000 because average interest bearing deposits increased
by $9.4 million, and the average rate paid on deposits increased by 20 basis
points.

Provision for Loan Losses was $25,000 for the quarter of June 30, 2000 compared
to $20,000 in the comparable quarter in 1999. The provision for the six months
ended June 30, 2000 was $50,000 compared to $35,000 for the comparable period in
1999. The provision for loan losses increased due to the increase in the loan
portfolio. There were no non-performing loans at June 30, 2000. At June 30,
2000, the allowance for loan losses was $402,000 representing 0.33% of period
end loans. Net charge-offs during the quarter were zero. The Company had one
commercial loan in the amount of $47,000 in which the borrower was in bankruptcy
at June 30, 2000, and one residential mortgage loan with a principal balance of
$19,000 which had been referred to legal counsel for foreclosure due to
nonpayment of real estate taxes, but both loans are current as to principal and
interest payments. The Company considered the status of these loans when
evaluating the appropriate provision for loan losses.

Non-interest income was $227,000 for the quarter ended June 30, 2000 as compared
to $77,000 for the same quarter in 1999. The increase of $150,000 is principally
caused by an increase of $138,000 in realized security gains in the quarter
ending June 30, 2000. Service charges on deposits increased by $6,000 due to the
emphasis on opening core deposit relationships. Other income increased by $6,000
due to ATM fees from non-customers and commission income from the sale of
non-bank investments through Salomon Smith Barney, which started an investment
center in the Bank in January. For the six months ended June 30, 2000,
non-interest income totaled $309,000 as compared to $149,000 for the same period
in 1999.

Non-interest expense was $1.0 million for the quarter ended June 30, 2000,
compared to $875,000 for the comparable quarter in 1999. The increase in
non-interest expenses for the quarter reflects


                                       11
<PAGE>

a $66,000 increase in salaries and benefits, which is comprised mostly of an
increase of $24,000 in incentive stock awards to the officers of the Bank,
compared to the same quarter in 1999. The additional $42,000 represents
increases in annual salaries and medical expenses for the Company. The Company
estimates that $100,000 of the increase in non-interest expense represents
additional costs associated with Warwick Community Bancorp's publicly expressed
implied acquisition proposal in April 2000. In addition, the increase in the
company's stock price, which accompanied Warwick's pronouncement, also increased
the Company's recorded expense for certain stock-based compensation plans in
which recorded expense is based on current stock price. For the six months ended
June 30, 2000 non-interest expense totaled $1.9 million compared to $1.7 million
for the comparable period in 1999.

Income tax expense was $245,000 and $509,000 for the second quarter and six
months ended June 30, 2000, as compared to $228,000 and $412,000 for the
comparable period for 1999. The increases were principally caused by increases
in income before taxes.


Liquidity and Capital Resources

The Company's primary sources of funds are deposits, borrowings, proceeds from
the principal and interest payments on loans, mortgage-backed and debt
securities and capital gain distributions on its mutual fund investment. While
maturities and scheduled amortization of loans and securities are predictable
sources of funds, deposit outflows, mortgage prepayments and mortgage loan and
securities sales are greatly influenced by general interest rates, economic
conditions and competition.

The Bank closely monitors its liquidity position on a regular basis. Excess
short-term liquidity is invested in overnight federal funds sold. If the Bank
requires funds beyond its ability to generate them internally, additional funds
are available through borrowings. At June 30, 2000, the Bank had available lines
of credit with the Federal Home Loan Bank of New York of $15.8 million, with
$8.9 million outstanding as of June 30, 2000. The Bank also had Federal Home
Loan Bank borrowings of $36 million at June 30, 2000, which were not against the
line of credit. The Bank undertook these borrowings as one method of leveraging
the additional capital obtained in its conversion to stock form. The Bank may,
from time to time, use borrowings to satisfy funding needs rather than increase
the rates paid on new deposits, because the latter could have a greater adverse
effect on the overall cost of funds.

Residential mortgage loan commitments and commercial loan commitments totaled
$5.5 million, and $1.1 million at June 30, 2000, respectively, and the Bank had
$1.6 million of unused home equity lines of credit and $2.5 million and $404,000
of unused commercial line of credit and consumer overdraft checking lines of
credit, respectively. Management anticipates that the Bank will have sufficient
funds available to meet its current loan commitments. Certificates of deposit
which are scheduled to mature in one year or less from June 30, 2000, totaled
$40.8 million. Management anticipates that the Bank will be able to retain
substantially all of such deposits if the Bank decides to do so to fund loans
and other investments.

The Bank is subject to the minimum liquidity regulations of the OTS. At June 30,
2000, OTS regulations required that the Bank maintain liquid assets equal to at
least 4% of its net withdrawable accounts plus short term borrowings, measured
on a monthly basis. The Bank has satisfied this requirement throughout the
period during which it has been a federal savings bank, and for June 30, 2000,
the Bank had liquid assets equal to 5.4% of net withdrawable accounts plus short
term borrowings.


                                       12
<PAGE>

The following table sets forth information regarding the regulatory capital
ratios of the Bank at June 30, 2000.

<TABLE>
<CAPTION>
                                                                            For Classification
                                Actual               Minimum Capital        as Well Capitalized
Bank                      Amount        Ratio       Amount       Ratio     Amount          Ratio
                                                   (Dollars in Thousands)
<S>                     <C>             <C>          <C>          <C>     <C>              <C>
Tangible Capital        $  25,532       13.77%       2,781        1.50%          --          --
Tier 1 (Core) Capital      25,532       13.77%       5,562        3.00%   $   9,270         5.0%
Risk Based Capital:
Tier 1                     25,532       28.52%          --          --        5,371         6.0%
Total                      25,934       28.97%       7,161        8.00%       8,951        10.0%
</TABLE>

The Bank was classified as "well capitalized" at June 30, 2000 under OTS
regulations.


Forward-Looking Statements

When used in this report on form 10-Q, in future filings by the Company with the
Securities and Exchange Commission, in the Company's press releases or other
public or stockholder communications, or in oral statements made with the
approval of an authorized officer, words and phrases such as " will likely
result" "are expected to," "will continue," "are estimated," "are anticipated"
and other similar expressions, are intended to identify "forward-looking
statements" under the Private Securities Litigation Reform Act. In particular,
certain information customarily disclosed by financial institutions, such as
estimates of interest rate sensitivity and the adequacy of the loan loss
allowance, are inherently forward-looking statements because, by their nature,
they represent attempts to estimate what will occur in the future.

A wide variety of factors could cause the Company's actual results and
experiences to differ materially from the anticipated results or other
expectations expressed in the Company's forward-looking statements. Some of the
risks and uncertainties that may affect operations, performance, results of the
Company's business, the interest rate sensitivity of its assets and liabilities,
and the adequacy of its loan loss allowance, include but are not limited to: (i)
deterioration in local, regional, national or global economic conditions which
could result, among other things, in an increase in loan delinquencies, a
decrease in property values, or a change in the housing turnover rate; (ii)
changes in market interest rates or changes in the speed at which market
interest rates change; (iii) changes in laws and regulations affecting the
financial services industry; (iv) changes in competition; and (v) changes in
consumer preferences.

Furthermore, changes in the economic circumstances of individual borrowers could
have a material adverse effect on their ability to repay their loans regardless
of general economic conditions. Likewise, financial adversity experienced by any
one major business in the Company's market area could have a significant adverse
effect on those of the Company's customers who are employees of that business or
otherwise rely upon it for their economic well being. This could affect their
ability to honor their loan obligations and their ability to maintain deposit
balances.

For these reasons, the Company cautions readers not to place undue reliance upon
any forward-looking statements. Forward-looking statements speak only as of the
date made and the Company assumes no obligation to update or revise any such
statements upon any change in applicable circumstances.




                                       13
<PAGE>

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

For information concerning GSB Financial Corporation's quantitative and
qualitative disclosures about market risk, refer to Item 7A of the GSB Financial
Corporation Annual Report on Form 10-K for the year ended December 31, 1999, as
filed with the Securities and Exchange Commission on March 30, 2000, and the
sections of the Annual Report to Stockholders referenced therein and included in
such report on Form 10-K, particularly the discussion at pages 9 through 11 of
the Annual Report to Stockholders under the Captions "Gap Analysis" and
"Analysis of Market Risk".


Part II - Other Information

Item 1.  Legal Proceedings

In the  ordinary  course of  business,  the  Company and the Bank are subject to
legal actions,  which involve claims for monetary relief.  Management,  based on
advice of counsel,  does not believe  that any  currently  known legal  actions,
individually or in the aggregate will have a material effect on its consolidated
financial condition or results of operation.

Item 2.   Changes in Securities

None

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

The Company held its Annual Meeting of Stockholders (the "Meeting") on April 27,
2000. The purpose of the Meeting was to vote on the following proposals:

     1.   The approval of amendments to our Stock Option Plan to provide for
          accelerated vesting in the event of a hostile change of control or
          retirement and to permit the grant of options without the restrictions
          contained in the Stock Option Plan as it now exists;

     2.   The approval of amendments to our Incentive Stock Award Plan to
          provide for accelerated vesting in the event of a hostile change of
          control or retirement and to permit awards without the restrictions
          contained in the Incentive Stock Award Plan as it now exists;

     3.   The election of three directors to our Board of Directors; and

     4.   The ratification of the appointment of Nugent & Hauessler, P.C. as our
          auditors for the fiscal year ending December 31, 2000.

The results of the vote on the Proposals were as follows:

Proposal 1:
                  For                   1,485,846
                  Withheld                222,671
                  Abstain                  14,518

                                       14
<PAGE>


Proposal 2:
                  For                   1,487,748
                  Withheld                220,319
                  Abstain                  14,968

Proposal 3:                                       For               Withhold
                  Clifford E. Kelsey, Jr.      1,663,058            59,977
                  Roy L. Lippincott            1,663,068            59,967
                  Herbert C. Mueller           1,663,068            59,967

In addition to Mr. Kelsey, Mr. Lippincott and Mr. Mueller, directors, Mr.
Gengel, Mr. Guarino, and Mr. Hopkins continue to serve after the meeting.

Proposal 4:       For                   1,686,474
                  Against                  24,261
                  Abstain                  12,300

Item 6.  Exhibits and Reports on Form 8-K

     Exhibit 11 - Computation of Earnings Per Share
     Exhibit 27 - Financial Data Schedule*

(b)  Reports on Form 8-K

None

----------
*    Submitted only with filing in electronic format.


                                       15

<PAGE>

                                   SIGNATURES

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


                                        GSB Financial Corporation
                                        -------------------------
                                        Principal Executive Officers:


Date: August 14, 2000
                                        /s/  Stephen W. Dederick
                                             Stephen W. Dederick
                                             Chief Financial Officer & Treasurer
                                             (Principal Financial and
                                             Accounting Officer)


                                        /s/  Rolland B. Peacock III
                                             Rolland B. Peacock III
                                             Vice President


                                        /s/  Barbara A. Carr
                                             Barbara A. Carr
                                             Secretary



                                       16