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 March 31, 2000

                                       or

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

            For the transition period from __________ to ____________


                         Commission File Number 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 May 12, 2000)

<PAGE>


                            GSB FINANCIAL CORPORATION
                                    FORM 10-Q
                                TABLE OF CONTENTS


INDEX

<TABLE>
<CAPTION>
PART I.   FINANCIAL INFORMATION                                                                Page

<S>       <C>                                                                                   <C>
Item 1.   Financial Statements

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

          Consolidated Statements of Income for the three months ended
          March 31, 2000 and 1999 (Unaudited)...........................................         4

          Consolidated Statements of Cash Flows for the three months ended March 31,
          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

Item 3.   Quantitative and Qualitative Disclosure about Market Risk.....................        13

PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings.............................................................        13

Item 6.   Exhibits and Reports on Form 8-K..............................................        13

          Signatures....................................................................        15
</TABLE>


                                       2

<PAGE>


GSB Financial Corporation and Subsidiary

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

<TABLE>
<CAPTION>
                                                                      March 31,   December 31,
                                                                      ------------------------
                                                                         2000         1999
                                                                      ---------    ---------
<S>                                                                   <C>          <C>
ASSETS
  Cash and due from banks .........................................   $   3,383    $   4,052
  Federal funds sold ..............................................         100          100
                                                                      ---------    ---------
  Cash and cash equivalents .......................................       3,483        4,152
  Investment securities available for sale ........................      48,050       46,871
  Mortgage-backed securities:
    Held to maturity  (estimated market values of $1,376 and
      $1,471 at March 31, 2000 and December 31, 1999, respectively)       1,402        1,471
    Available for sale ............................................       1,893        2,004
  Loans receivable, net ...........................................     117,881      115,273
  Banking house and equipment .....................................       2,970        2,768
  Accrued interest receivable .....................................       1,380        1,315
  Prepaid expenses and other assets ...............................       2,073        2,162
                                                                      ---------    ---------
        Total assets ..............................................   $ 179,132    $ 176,016
                                                                      =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
  Liabilities
    Deposits ......................................................   $ 107,727    $ 106,256
    Mortgagors' escrow deposits ...................................         400          503
    Federal funds purchased .......................................       4,750        3,600
    Borrowings ....................................................      35,000       35,000
    Accrued expenses and other liabilities ........................       2,259        1,548
                                                                      ---------    ---------
        Total liabilities .........................................   $ 150,136    $ 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 March 31, 2000 and December 31, 1999) ...          22           22
    Additional paid-in capital ....................................      21,548       21,575
    Retained earnings, substantially restricted ...................      14,801       14,518
    Accumulated other comprehensive income ........................      (1,323)      (1,297)
    Treasury stock, at cost .......................................      (4,343)      (4,052)
    Unearned ISAP stock ...........................................        (406)        (308)
    Unallocated ESOP stock ........................................      (1,303)      (1,349)
                                                                      ---------    ---------
        Total stockholders' equity ................................   $  28,996    $  29,109
                                                                      ---------    ---------
        Total liabilities and stockholders' equity ................   $ 179,132    $ 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
                                                                       March 31,
                                                              --------------------------
                                                                 2000            1999
                                                              ----------      ----------
<S>                                                           <C>             <C>
INTEREST INCOME
   Loans ...............................................      $    2,153      $    1,613
   Federal funds sold ..................................               7              54
   Investment securities ...............................             871             537
   Mortgage-backed securities ..........................              58             107
                                                              ----------      ----------
     Total interest income .............................           3,089           2,311

INTEREST EXPENSE
   Deposit accounts ....................................           1,000             864
   Borrowings ..........................................             582             166
                                                              ----------      ----------
     Total interest expense ............................           1,582           1,030
   Net interest income .................................           1,507           1,281
   Provision for loan losses ...........................              25              15
                                                              ----------      ----------
   Net interest income after provision for loan losses .           1,482           1,266

NON-INTEREST INCOME
   Service charges on deposit accounts .................              44              44
   Other income ........................................              38              28
   Net realized gains on securities ....................              --              --
   Capital gains distributions .........................              --              --
                                                              ----------      ----------
     Total non-interest income .........................              82              72

NON-INTEREST EXPENSE
   Salaries and employee benefits ......................             427             380
   Occupancy and equipment .............................              91              94
   Data processing expenses ............................              78              76
   Other non-interest expense ..........................             302             311
                                                              ----------      ----------
     Total non-interest expense ........................             898             861
                                                              ----------      ----------

   Income before income taxes ..........................             666             477
   Income tax expense ..................................             264             184
                                                              ----------      ----------

   Net income ..........................................      $      402      $      293
                                                              ==========      ==========

   Basic earnings per share ............................      $     0.22      $     0.15
   Weighted average shares outstanding - basic .........       1,792,216       1,926,463
   Diluted earnings per share ..........................      $     0.22      $     0.15
   Weighted average shares outstanding - diluted .......       1,795,535       1,944,691
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       4

<PAGE>


                            GSB FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                Three Months Ended March 31,
                                                                                ----------------------------
                                                                                     2000           1999
                                                                                   --------       --------
                                                                                        (In Thousands)
<S>                                                                                <C>            <C>
Cash flows from operating activities:
Net income (loss) ...........................................................      $    402       $    293
Adjustments to reconcile net income to net cash provided by  operating
activities:
Depreciation ................................................................            47             43
Provision for loan losses ...................................................            25             15
Fair value provision of ESOP & ISAP shares committed to be released .........            81             72
Gain in maturity/redemption of investment securities available for sale .....            --             --
Increase (decrease) other assets ............................................            54           (182)
Net amortization on investment securities -  available for sale .............            (4)            16
Net amortization (accretion) on mortgage - backed
  Securities - held to maturity .............................................            (3)            (3)
Net amortization (accretion) on mortgage - backed
  Securities - available for sale ...........................................             1              6
Increase (decrease) in accrued expenses and other  liabilities ..............           711            347
                                                                                   --------       --------
Net cash provided by operating activities ...................................         1,314            607
                                                                                   --------       --------

Cash flows from investing activities:

Proceeds from principal paydowns of mortgage - backed
  Securities -  held to maturity ............................................            71            298
Purchase of mortgage-backed securities - held to maturity ...................            --             --
Proceeds from principal paydowns of mortgage - backed
  Securities - available for sale ...........................................           117            745
Proceeds from maturity and redemption of investment
  Securities - available for sale ...........................................           850            500
Proceeds from sale of investment securities - available for sale ............            --             --
Purchase of investment securities - available for sale ......................        (2,090)       (11,315)
Net (increase)  in loans ....................................................        (2,633)        (9,148)
Capital expenditures ........................................................          (249)           (39)
Proceeds from sale of other real estate owned ...............................            --             --
                                                                                   --------       --------
Net cash provided (used) by investing activities ............................        (3,934)       (18,959)
                                                                                   --------       --------

Cash flow from financing activities:
Net increase (decrease) in demand, statement passbook, money
  Market and NOW deposit accounts ...........................................         1,471          4,108
Proceeds from borrowings ....................................................            --         10,000
Proceeds from purchased federal funds .......................................         1,150             --
Dividends paid ..............................................................          (119)           (65)
Purchase of treasury stock ..................................................          (448)          (195)
Increase (decrease) in advances from borrowers for taxes
  And insurance .............................................................          (103)            14
                                                                                   --------       --------
Net cash provided by (used in) financing activities .........................         1,951         13,862
                                                                                   --------       --------

Net increase (decrease) in cash and cash equivalents ........................          (669)        (4,490)
Cash and cash equivalents at beginning of year ..............................         4,152          8,254
                                                                                   --------       --------
Cash and cash equivalents at end of year ....................................      $  3,483       $  3,764
                                                                                   ========       ========

Additional Disclosures:

Supplemental disclosures of cash flows information-cash paid during year for:
     Interest on other borrowings ...........................................      $    552       $    131
     Income taxes ...........................................................           134            494

Supplemental schedule of non-cash investing activities:

Change in unrealized gains & losses in investment securities -
  Available for sale ........................................................           (58)          (296)
</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
March 31, 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 March 31, 2000,  49,461 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 March 31,
                                                 ----------------------------------------------------------------------------
                                                                  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) ......................      $116,389      $  2,153        7.40%     $ 89,168       $  1,613       7.24%
Mortgage-backed securities ................         3,465            58        6.66         6,428            107       6.66
Investment securities .....................        50,427           871        6.91        34,418            537       6.24
Federal funds sold ........................         1,268             7        2.21         4,943             54       4.37
                                                 --------      --------                  --------       --------
    Total interest-earning assets .........       171,549         3,089        7.20       134,957          2,311       6.85
                                                               --------                                 --------
Non-interest-earning assets ...............         5,492                                   6,643
                                                 --------                                --------
     Total assets .........................      $177,041                                $141,600
                                                 ========                                ========
Interest-bearing liabilities:
Savings accounts ..........................      $ 31,400           234        2.98      $ 29,168            216       2.96
Certificates of deposit ...................        45,664           554        4.85        41,675            493       4.73
Money market ..............................        15,824           174        4.41        13,412            123       3.67
NOW accounts ..............................         6,788            38        2.21         5,731             32       2.23
Other .....................................        39,157           582        5.95        12,911            166       5.14
                                                 --------      --------                  --------       --------
    Total interest-bearing liabilities ....       138,833         1,582        4.56       102,897          1,030       4.00
                                                               --------                                 --------
Non-interest-bearing liabilities ..........         9,306                                   7,228
                                                 --------                                --------
    Total liabilities .....................       148,139                                 110,125
Equity ....................................        28,902                                  31,475
                                                 --------                                --------
     Total liabilities and equity .........      $177,041                                $141,600
                                                 ========                                ========

Net interest income/spread (2)(3) .........                    $  1,507        2.64%                    $  1,281       2.85%
                                                               ========       =====                     ========      =====

Net earning assets/net interest margin (4)       $ 32,716                      3.51%     $ 32,060                      3.80%
                                                 ========                     =====      ========                     =====

Ratio of average interest-earning assets
    to average interest-bearing liabilities                       1.24x                                    1.31x
                                                               ========                                 ========
</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>


Comparison of Financial Condition at March 31, 2000 and December 31, 1999

Total assets were $179.1 million at March 31, 2000 as compared to $176.0 million
at December  31,  1999,  representing  1.8%  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 stocks.  Loans, net increased $2.6 million,  or 2.3%,
from $115.3  million to $117.9  million.  Residential  loans  increased  by $2.1
million because of origination efforts at a time of slower residential  mortgage
loan  demand due to rising  interest  rates.  The  Company  also  increased  its
commercial mortgage and other business loans by $400,000.  Investment securities
available for sale increased by $1.2 million,  while mortgage-backed  securities
decreased by $180,000,  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
the scheduled principal payments.  Deposits increased by $1.5 million or 1.4% to
$107.7  million at March 31, 2000 as compared to $106.3  million at December 31,
1999. The increase  includes a $1.1 million increase in deposits in the Harriman
branch  this past  quarter.  Core  deposits  (representing  deposits  other than
certificates of deposit) increased by $2.2 million to $62.8 million at March 31,
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 decreased to $29.0 million at March 31, 2000, from $29.1 million at
December 31, 1999. The $113,000 decrease in equity resulted principally from the
repurchase of $448,000 of the Company's  stock and a $26,000  adverse  change in
the net  unrealized  value of  securities  held for  sale,  partially  offset by
retained  earnings.  The  Company  repurchased  38,300  shares of its stock from
December 31, 1999 through March 31, 2000.  The Company  announced on October 21,
1999 a stock repurchase program of 103,492 shares,  with 85,300 shares purchased
in that program through March 31, 2000.


Comparison  of  Operating  Results For the Three Months Ended March 31, 2000 and
1999

Interest  Income  was $3.1  million  for the first  quarter  of  fiscal  2000 as
compared to $2.3 million for the same period in 1999, an increase of $778,000 or
33.7%.  The  increase in the  quarterly  interest  income was  primarily  volume
related due to a $36.6  million or 27.1%,  increase in average  earning  assets,
augmented by a 35 basis point increase in the average yield on earnings assets.

The volume  increase  was  enhanced by a 16 basis point  increase in the average
yield on loans. Our aggressive  efforts to increase our loan portfolio  resulted
in a $27.2  million  increase  in the  average  balance of loans,  which was the
principal  contributor  to our  $540,000  increase in interest  income on loans.
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 $334,000 for the
quarter,  due to  increases  in the average  balances  of $16.0  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 67 basis points in comparable quarters, caused by higher
market  interest  rates and because the purchase of callable  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 $49,000
due to a $3.0 million decrease in the average


                                       9

<PAGE>


balance of  mortgage-backed  securities  resulting  from  accelerated  principal
payments.  Interest  earned on federal  funds sold  decreased by $47,000 for the
quarter  ended  March 31,  2000,  compared  to the same  period in 1999,  due to
decreases in the average  balances of $3.7 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 $1.6  million  for the  quarter  ended  March 31, 2000 as
compared to $1.0 million for the same quarter in 1999.  The primary cause of the
increase was the tripling of 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 $12.9 million
in the quarter ended March 31, 1999 to $39.2  million in the 2000  quarter.  The
average  cost of  borrowings  also  increased  by 81 basis  points  between  the
quarters due to an increase in market rates.  The $416,000  increase in interest
paid on borrowings  represented more than 75% of the total $552,000  increase in
interest paid. Interest paid on deposits increased $136,000 from the 1999 to the
2000  quarter  because  average  interest  bearing  deposits  increased  by $9.7
million, and the average rate paid on deposits increased by 17 basis points. The
Company has emphasized  lower cost deposit products in order to improve leverage
while  reducing  upward  pressures on its cost of funds.  Core deposits to total
deposits  increased  to 58.3% at March 31,  2000  compared to 57.4% at March 31,
1999.

Provision for Loan Losses was $25,000 for the quarter of March 31, 2000 compared
to $15,000 in the  comparable  quarter in 1999.  The  provision  for loan losses
increased   due  to  the  increase  in  the  loan   portfolio.   There  were  no
non-performing  loans at March 31, 2000.  At March 31, 2000,  the  allowance for
loan losses was $376,000 representing 0.32% of period end loans. Net charge-offs
during the quarter were zero. The Company had one commercial  loan in the amount
of $48,000 in which the borrower was in  bankruptcy  at March 31, 2000,  and one
residential  mortgage  loan with a principal  balance of $19,000,  referred  for
foreclosure due to nonpayment of real estate taxes,  but both loans are current.
The Company considered the status of these loans when evaluating the appropriate
provision for loan losses.

Non-interest income was $82,000 for the quarter ended March 31, 2000 as compared
to $72,000 for the same quarter in 1999.  The increase of $10,000 is principally
caused by an increase in 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.

Non-interest expense was $898,000 for the quarter ended March 31, 2000, compared
to $861,000 for the  comparable  quarter in 1999.  The increase in  non-interest
expenses  reflects a $47,000  increase in  salaries  and  benefits,  the largest
component of this  increase was a $25,000  increase in the expense of restricted
stock  award's as the Company used such awards as part of an  incentive  program
for  officers.  The  additional  $22,000  represents  increases  in salaries and
medical expenses.  As a result of the effort to control expenses during a period
of growth,  the Company improved its efficiency ratio from 64.3% for the quarter
ended March 31, 1999 to 57.4% for the quarter ended March 31, 2000.

Income tax expense was $264,000 for the first  quarter  ended March 31, 2000, as
compared to $184,000 for the  comparable  period for 1999.  The  increases  were
principally caused by increases in income before taxes.


                                       10

<PAGE>


Warwick  Implied Offer.  On April 20, 2000,  the Company  received a letter from
Warwick Community Bancorp,  Inc. ("WCBI"),  which implied a willingness to offer
$18 per share to acquire the Company.  WCBI simultaneously filed an amendment of
its Schedule 13D with the  Securities and Exchange  Commission  which included a
copy of the  letter.  The Board of  Directors  of the Company is  reviewing  its
alternatives  with its investment  bankers and legal counsel.  Regardless of the
results of the Board of Directors  review,  this situation is likely to increase
the Company's  expenses for professional fees and similar costs in the immediate
future.  In  addition,  as a  result  of  Warwick's  actions,  the  Company  has
determined  that it is not permitted to  repurchase  its own stock at this time.
This has the effect of reducing the Company's  ability to use stock  repurchases
as a tool to manage its relatively high level of capital.


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 December 31, 1999, the Bank had available
lines of credit  with the Federal  Home Loan Bank of New York of $15.8  million,
with $9.8 million  outstanding  as of March 31, 2000.  The Bank also had Federal
Home Loan Bank  borrowings  of $30  million  at March 31,  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
$3.2 million, and $2.9 million at March 31, 2000, respectively, and the Bank had
$1.7 million of unused home equity lines of credit and $2.3 million and $370,000
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 March 31, 2000,  totaled
$42.2  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 March
31, 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 March 31,
2000, the Bank had liquid assets equal to 6.1% of net withdrawable accounts plus
short term borrowings.


                                       11

<PAGE>


The following  table sets forth  information  regarding the  regulatory  capital
ratios of the Bank at March 31, 2000.

<TABLE>
<CAPTION>
                                        Actual             Minimum Capital     For Classification as
                                                                                  Well Capitalized

Bank                               Amount    Ratio         Amount    Ratio        Amount    Ratio
                                                        (Dollars in Thousands)
<S>                                <C>       <C>           <C>        <C>         <C>       <C>
Tangible Capital                  $24,977    14.06%        2,664      1.50%           --      --
Tier 1 (Core) Capital              24,977    14.06%        5,328      3.00%       $8,880     5.0%
Risk Based Capital:
Tier 1                             24,977    28.33%           --        --         5,388     6.0%
Total                              25,353    28.23%        7,184      8.00%        8,980    10.0%
</TABLE>

The Bank was  classified  as "well  capitalized"  at March  31,  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.


                                       12

<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 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.


                                       13

<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: May 12, 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

                                       14