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


                                    FORM 10-K

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

                    For the fiscal year ended March 31, 2001

                                       OR

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

                        Commission file number 000-24187

                           HUDSON RIVER BANCORP, INC.
             (Exact Name of Registrant as Specified in its Charter)

                    Delaware                                14-1803212
         (State or other jurisdiction of                  (I.R.S. Employer
         incorporation or organization)                   Identification No.)

         One Hudson City Centre, Hudson, New York               12534
         (Address of principal executive offices)            (Zip Code)

Registrant's telephone number, including area code: (518) 828-4600

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

                                      None

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

                     Common Stock, par value $.01 per share
                                (Title of Class)

     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  twelve  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 by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     As of June 15, 2001, there were issued and outstanding 15,278,205 shares of
the  Registrant's  Common Stock.  The aggregate market value of the voting stock
held by non-affiliates  of the Registrant,  computed by reference to the average
of the closing bid and asked prices of such stock on the Nasdaq  National Market
System as of June 15, 2001, was approximately $265.5 million.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Part II of Form 10-K - Annual  Report to  Shareholders  for the fiscal year
     ended March 31, 2001.

     Part III of Form 10-K - Portions of Proxy Statement for 2001 Annual Meeting
     of Shareholders.


<PAGE>

                                     PART I

Item 1. Description of Business
        -----------------------

                             BUSINESS OF THE COMPANY

General

     Hudson River Bancorp,  Inc. (the "Company"),  a Delaware  corporation,  was
organized  on March 5, 1998 at the  direction  of the Board of  Trustees  of the
Hudson River Bank & Trust  Company (the  "Bank")  (formerly  Hudson City Savings
Institution)  for the purpose of owning all of the outstanding  capital stock of
the Bank upon  consummation of the Bank's  conversion from a mutual savings bank
to a stock savings bank. The Company,  as the sole stockholder of the Bank, is a
savings and loan holding company  regulated by the Office of Thrift  Supervision
("OTS").

     The  Company  is an  operating  company.  The  Company  directs,  plans and
coordinates the business activities of the Bank and also is actively involved in
the plans and  activities  of its  affiliates.  In the  future,  the Company may
continue to acquire or organize other  operating  subsidiaries,  including other
financial  institutions,  or it  may  merge  with  or  acquire  other  financial
institutions and financial services related companies.  The Company neither owns
nor leases any property but instead uses the premises and equipment of the Bank.
The Company does not currently employ any persons other than certain officers of
the Bank who are not separately compensated by the Company. The Company utilizes
the support staff of the Bank from time to time, if needed. Additional employees
will be hired as appropriate  to the extent the Company  expands its business in
the future.

     Throughout  this  Annual  Report on Form 10-K for the year ended  March 31,
2001,  references to the Company  include both the Company and the Bank,  unless
otherwise noted. For additional  information on the business of the Company, see
page 11 of the  Company's  Annual  Report  to  Shareholders  attached  hereto as
Exhibit 13 and incorporated herein by reference.

Market Area

     The  Bank's  primary   market  area  is  comprised  of  Columbia,   Albany,
Rensselaer,  Saratoga  and  Schenectady  Counties  in New York and  portions  of
Dutchess County in New York.

     The  Company's  primary  market area consists  principally  of suburban and
rural  communities  with  service,   wholesale/retail   trade,   government  and
manufacturing serving as the basis of the local economy.  Service jobs represent
the largest type of employment in the Company's  primary market area,  with jobs
in wholesale/retail trade accounting for the second largest employment sector.

Lending Activities

     General.   The  Company   primarily   originates  and  retains  fixed-  and
adjustable-rate residential mortgage loans, including home equity loans, secured
by the borrower's primary residence. Generally, the term of the loans originated
ranges  from 15 to 30 years.  The Company  also  originates  to a lesser  extent
commercial  real estate loans,  commercial  loans,  manufactured  housing loans,
financed   insurance   premiums  and  other  consumer   loans.   In-market  loan
originations  are generated by the Company's  marketing  efforts,  which include
print, radio and television advertising,  lobby displays and direct contact with
local civic and religious  organizations,  as well as by the  Company's  present
customers,  walk-in customers and referrals from real estate agents, brokers and
builders.  The marketing  for  manufactured  housing loans is conducted  through
Tammac  Corporation  with which the  Company has an  agreement  relating to such
loans. The marketing for financed  insurance  premiums is conducted  through the
Company's premium finance subsidiary. See "Consumer Lending." At March 31, 2001,
the Company's total loan portfolio totaled approximately $881.4 million.

     The types of loans that the  Company may  originate  are subject to federal
and state laws and  regulations.  Interest rates charged by the Company on loans
are  affected by the demand for such loans,  the supply of money  available  for
lending purposes and the rates offered by competitors. These factors are in turn
affected by, among other things,  economic conditions,  monetary policies of the
Federal  government,  including  the  Federal  Reserve  Board  ("FRB"),  and tax
policies.  For a description of the Company's lending portfolio,  see page 18 of
the Company's 2001 Annual Report to  Shareholders  attached hereto as Exhibit 13
and incorporated herein by reference.

<PAGE>

     The following table  illustrates the contractual  maturity of the Company's
construction,  commercial real estate,  and commercial  loans at March 31, 2001.
Loans which have adjustable or renegotiable interest rates are shown as maturing
in the period  during which the  contract is due. The schedule  does not include
the effects of possible prepayments or enforcement of due-on-sale clauses.

<TABLE>
<CAPTION>
                                                                   Commercial
                                              Construction        Real Estate      Commercial
              (In thousands)                      Loans              Loans           Loans            Total
                                            -------------------------------------------------------------------
<S>                                               <C>               <C>              <C>             <C>
               Amounts  due:
               1 year or less .........           $  115            $ 13,297         $36,001         $ 49,413

               After 1 year:
                 1 to 5 years .........               --              53,613          17,994           71,607
                 Over 5 years .........            9,191             100,434           6,316          115,941
                                                  ------            --------         -------         --------
               Total due after one year            9,191             154,047          24,310          187,548
                                                  ------            --------         -------         --------
               Total amount due .......           $9,306            $167,344         $60,311         $236,961
                                                  ======            ========         =======         ========
</TABLE>


     The following  table sets forth the dollar amounts in the  respective  loan
category at March 31, 2001 that are  contractually due after March 31, 2002, and
whether such loans have fixed interest rates or adjustable interest rates.


                                                  Due after March 31, 2002
                                               -------------------------------
(In thousands)                                 Fixed      Adjustable     Total
                                               -----      ----------     -----

Construction loans .......................    $ 8,417      $   774      $  9,191
Commercial real estate loans .............     73,280       80,767       154,047
Commercial loans .........................      6,840       17,470        24,310
                                              -------      -------      --------
    Total ................................    $88,537      $99,011      $187,548
                                              =======      =======      ========



Residential Real Estate Lending

     The   Company's   residential   real  estate  loans  consist  of  primarily
one-to-four family,  owner-occupied mortgage loans, including home equity loans.
At March  31,  2001,  $515.6  million,  or 58.4% of the  Company's  total  loans
consisted of residential  mortgage loans and home equity loans. The Company does
not  originate  fixed-rate  loans for terms longer than 30 years.  The Company's
residential  real  estate  loans  are  priced  competitively  with  the  market.
Accordingly,  the Company  attempts to distinguish  itself from its  competitors
based on quality of service.

     The Company generally underwrites its fixed-rate residential mortgage loans
using accepted secondary market standards. In underwriting  residential mortgage
loans, the Company evaluates, among other things, the borrower's ability to make
monthly  payments  and the value of the property  securing the loan.  Properties
securing real estate loans made by the Company are appraised by independent  fee
appraisers  approved by the Company's Board of Directors.  The Company  requires
borrowers to obtain title insurance,  and fire and property insurance (including
flood  insurance,  if  necessary)  in an amount  not less than the amount of the
loan.

     The Company currently offers  adjustable-rate  residential mortgage ("ARM")
loans with initial  fixed rate periods from one to ten years.  Subsequent to the
initial fixed period the interest rate adjusts  annually  based on the change in
the relevant United States Treasury index.  These loans generally provide for up
to a 2.0%  periodic cap and a lifetime cap of 6.0% over the initial  rate.  As a
consequence  of using caps, the interest rates on these loans may not be as rate
sensitive as

<PAGE>

the Company's  cost of funds.  Borrowers of one-year  residential  ARM loans are
generally  qualified  at a rate of 2.0% above the  initial  interest  rate.  The
Company  offers  ARM loans  that are  convertible  into  fixed-rate  loans  with
interest  rates based upon the then current  market rates.  ARM loans  generally
pose greater credit risks than fixed-rate  loans,  primarily because as interest
rates rise, the required periodic payment by the borrower rises,  increasing the
potential  for  default.  However,  as of March 31,  2001,  the  Company had not
experienced higher default rates on these loans relative to its other loans.

     The  Company's   residential  mortgage  loans  do  not  contain  prepayment
penalties and do not permit  negative  amortization  of  principal.  Real estate
loans  originated  by the  Company  generally  contain  a "due on  sale"  clause
allowing  the  Company to declare the unpaid  principal  balance due and payable
upon the sale of the security  property.  The Company has waived the due on sale
clause on loans held in its portfolio from time to time to permit assumptions of
the loans by qualified borrowers.

     Generally,  the Company does not originate residential mortgage loans where
the  ratio of the loan  amount to the value of the  property  securing  the loan
(i.e., the "loan-to-value" ratio) exceeds 95%, although on occasion, the Company
may lend up to 97% of the  value  of the  property  securing  the  loan.  If the
loan-to-value  ratio  exceeds  80%,  the  Company  generally  requires  that the
borrower  obtain private  mortgage  insurance in amounts  intended to reduce the
Company's  exposure  to 80% or less of the lower of the  appraised  value or the
purchase price of the property securing the loan.

     The  Company's  home equity loans and lines of credit are secured by a lien
on the borrower's  residence and generally do not exceed  $250,000.  The Company
uses the  same  underwriting  standards  for  home  equity  loans as it uses for
residential  mortgage  loans.  Home equity  loans are  generally  originated  in
amounts which,  together with all prior liens on such  residence,  do not exceed
80% of the appraised value of the property securing the loan. The interest rates
for home equity loans and lines of credit either float, at a stated margin, with
the prime rate or have fixed interest rates. Home equity lines of credit require
interest and principal  payments on the outstanding  balance for the term of the
loan.  The terms of the Company's home equity lines of credit are generally five
years to ten years, with a payback period ranging from five to twenty years.

Commercial Real Estate Lending

     The Company engages in commercial real estate lending secured  primarily by
apartment buildings, office buildings,  motels, nursing homes and strip shopping
centers  located in the Company's  primary  market area. At March 31, 2001,  the
Company had $167.3 million of commercial real estate loans,  representing  19.0%
of the Company's total loan portfolio.

     Commercial  real estate  loans have either  fixed or  adjustable  rates and
terms to maturity  that do not exceed 25 years.  The Company's  current  lending
guidelines generally require that the property securing a loan generate net cash
flows of at least  125% of debt  service  after  the  payment  of all  operating
expenses, excluding depreciation,  and the loan-to-value ratio not exceed 75% on
loans secured by such properties.  As a result of a decline in the value of some
properties in the Company's primary market area and due to economic  conditions,
the current  loan-to-value  ratio of some  commercial  real estate  loans in the
Company's portfolio may exceed the initial  loan-to-value ratio, and the current
debt service ratio may exceed the initial debt service  ratio.  Adjustable  rate
commercial  real estate loans provide for interest at a margin over a designated
index,  often a designated prime rate, with periodic  adjustments,  generally at
frequencies of up to five years. In  underwriting  commercial real estate loans,
the Company  analyzes the financial  condition of the borrower,  the  borrower's
credit history,  the reliability and  predictability of the net income generated
by the  property  securing the loan and the value of the  property  itself.  The
Company generally  requires personal  guarantees of the borrowers in addition to
the security  property as  collateral  for such loans.  Appraisals on properties
securing commercial real estate loans originated by the Company are performed by
independent fee appraisers approved by the Board of Directors.

     Commercial real estate loans generally  present a higher level of risk than
loans  secured by one- to  four-family  residences.  This greater risk is due to
several factors, including the concentration of principal in a limited number of
loans  and  borrowers,  the  effect of  general  economic  conditions  on income
producing  properties and the increased  difficulty of evaluating and monitoring
these types of loans. Furthermore,  the repayment of loans secured by commercial
real estate is typically dependent upon the successful  operation of the related
real estate project.  If the cash flow from the project is reduced (for example,
if leases are not obtained or renewed,  or a bankruptcy  court  modifies a lease
term,  or a major  tenant is  unable to  fulfill  its  lease  obligations),  the
borrower's  ability  to  repay  the loan may be  impaired  and the  value of the
property may be reduced.

<PAGE>

Consumer Lending

     The  Company  offers a variety of secured  and  unsecured  consumer  loans,
including  manufactured  housing loans (loans secured by prefabricated or mobile
homes which serve as the borrower's dwelling),  financed insurance premiums and,
to  a  lesser  extent,  lines  of  credit  and  loans  secured  by  automobiles.
Substantially  all of the  Company's  manufactured  housing  loans and  financed
insurance  premium loans are  originated  outside the Company's  primary  market
area.  The balance of the  Company's  consumer  loans is  originated  inside the
Company's market area.

     The underwriting standards employed by the Company for consumer loans other
than  financed  insurance  premiums  generally  include a  determination  of the
applicant's  payment history on other debts and an assessment of ability to meet
existing   obligations   and   payments   on   the   proposed   loan.   Although
creditworthiness of the applicant is the primary consideration, the underwriting
process  also  includes a comparison  of the value of the property  securing the
loan, if any, in relation to the proposed loan amount. For information regarding
underwriting  of  financed  insurance   premiums,   see  "-  Financed  Insurance
Premiums."

     Manufactured  Housing  Loans.  In order to facilitate  its  origination  of
manufactured  housing lending,  the Company is party to an agreement with Tammac
Corporation  ("Tammac"),  pursuant to which Tammac solicits manufactured housing
loan applications on behalf of the Company. Under the agreement, the Company may
refuse to accept for any reason any application referred to it by Tammac. Tammac
provides certain collection services to the Company, which include, for any loan
that is more than 30 days  past due,  attempting  to cause the  borrower  to pay
delinquent  installments  and to bring his or her delinquent loan payments up to
date.  Tammac  also  provides  repossession  and  liquidation  services,  at the
direction of the Company,  for certain delinquent loans.  Tammac is paid a fixed
percentage  of the  amount  financed  by  the  borrower  and  does  not  receive
additional  compensation  for  collection,  repossession,  or any other services
provided to the Company.  Substantially  all of the  manufactured  housing loans
originated by the Company have been referred to it by Tammac.

     Manufactured housing loans represent the largest component of the Company's
consumer  loan  portfolio.  At  March  31,  2001,  the  Company's  portfolio  of
manufactured  housing  loans totaled  $75.3  million,  or 8.6% of its total loan
portfolio.  The Company's manufactured housing loans are typically originated at
a higher rate than residential first mortgage loans, and generally have terms of
up to 20 years. Historically, the Company's manufactured housing loans have been
made with both fixed and adjustable rates of interest.  Currently,  however, the
Company  originates only fixed-rate  manufactured  housing loans.  The Company's
adjustable-rate  manufactured  housing loans  typically have an interest rate of
4.0% above the one year United States Treasury index, adjusted annually,  with a
2.0%  maximum  annual  adjustment  and a 16.0%  interest  rate cap.  The initial
interest rate represents the floor. Because the loan may be based on the cost of
the  manufactured  housing  as well as  improvements  and  because  manufactured
housing may decline in value due to wear and tear following  their initial sale,
the value of the  collateral  securing a  manufactured  housing loan may be less
than  the loan  balance.  At the time of  origination,  inspections  are made to
substantiate  current market values on all  manufactured  homes. The Company has
purposely  allowed the manufactured  housing loan portfolio to decrease from its
prior year balances.

     Financed Insurance Premiums.  The second largest component of the Company's
consumer loan portfolio is financed  insurance  premiums.  The Company  conducts
such lending through a general partnership known as Premium Payment Plan ("PPP")
in which Hudson City  Associates,  Inc., a wholly owned  subsidiary of the Bank,
holds a 65%  ownership  interest.  The  remaining 35% interest is held by F.G.O.
Corporation,  which is responsible for the marketing of PPP's  business.  Hudson
City  Associates  receives  65% of any profits but absorbs 100% of any losses of
PPP.  No  profit  distributions  are made to F.G.O.  Corporation  until any past
losses  have been  recouped.  PPP is  currently  licensed  to provide  insurance
premium  financing in twenty-eight  states,  but does business  primarily in New
York, New Jersey and Pennsylvania. Management estimates that approximately 23.1%
of premiums  financed are for  non-standard  and  sub-standard  (assigned  risk)
personal automobile insurance and the remaining 76.9% are for various commercial
lines of  insurance.  Interest  rates  charged on these loans are  substantially
higher  than those  charged on other  types of loans.  Terms on these  loans are
primarily for nine months.

     The Company has experienced a relatively high level of delinquencies in its
financed  insurance  premium  portfolio  resulting  in higher  charge-offs.  The
Company may continue to experience a high level of delinquencies and charge-offs
in this  class  of  loans  due to the  nature  of  this  type  of  lending.  The
underwriting  of these loans is generally  not based upon the credit risk of the
borrower.  In the typical case, funds are advanced to the insurance  company for
the full amount of the premium  upon receipt of a down payment from the insured.
If the insured defaults on the loan, the

<PAGE>

Company  sustains a loss to the extent the  premium  has been  earned by (and is
therefore   unrecoverable  from)  the  insurance  company.  The  Company's  most
significant exposure to loss occurs when the initial insurance premium quoted by
an  insurance  broker,  and used as the basis for the loan and the related  down
payment, is increased by the underwriting insurance company subsequent to making
the loan. In these  instances,  if the borrower decides not to pay the increased
premium amount, the Company is left with an insufficient down payment,  relative
to the  increased  premium,  and little or no collateral in the way of insurance
premiums  refundable by the insurance  company.  Accordingly,  writing  financed
insurance  premiums through  insurance  brokers who accurately quote the initial
insurance  premium is critical to this type of lending.  At March 31, 2001,  the
Company  had  $38.2  million  of  financed   insurance   premiums  through  PPP,
representing 4.3% of the Company's total loan portfolio.

     Consumer  loans may entail greater  credit risk than  residential  mortgage
loans,  particularly  in the case of consumer  loans which are  unsecured or are
secured by assets  which may decline in value.  In such cases,  any  repossessed
collateral for a defaulted  consumer loan may not provide an adequate  source of
repayment  of  the  outstanding  loan  balance  as  a  result  of  high  initial
loan-to-value ratios,  repossession,  rehabilitation and carrying costs, and the
greater likelihood of damage, loss or depreciation of the property, and thus are
more  likely to be affected by adverse  personal  circumstances.  In the case of
manufactured  home loans,  which may have loan  balances in excess of the resale
value of the  collateral,  borrowers may abandon the collateral  property making
repossession by the Company and subsequent  losses more likely.  The application
of various federal and state laws, including bankruptcy and insolvency laws, may
limit  the  amount  which  can  be  recovered  on  consumer   loans,   including
manufactured home loans.

Commercial Lending

     At March 31, 2001, commercial loans comprised $60.3 million, or 6.9% of the
Company's total loan portfolio. Most of the Company's commercial loans have been
extended to finance local businesses and include  primarily  short-term loans to
finance machinery and equipment purchases,  inventory,  and accounts receivable.
Commercial   loans  also  involve  the  extension  of  revolving  credit  for  a
combination of equipment  acquisitions  and working  capital  needs,  as well as
mortgage warehouse lines of credit.

     The terms of loans  extended on machinery  and  equipment  are based on the
projected  useful life of such machinery and equipment,  generally not to exceed
seven  years.  Lines of credit are  available  to  borrowers  provided  that the
outstanding  balance is paid in full (i.e.,  the credit line has a zero balance)
for at least 30 days every year.  All lines of credit are  reviewed on an annual
basis. In the event the borrower does not meet this 30-day requirement, the line
of credit may be terminated and the outstanding  balance may be converted into a
fixed term loan. The Company has standby letters of credit outstanding which are
offered at competitive rates and terms and are generally on a secured basis.

     Unlike residential  mortgage loans,  commercial loans are typically made on
the basis of the borrower's  ability to make repayment from the cash flow of the
borrower's business. As a result, the availability of funds for the repayment of
commercial loans may be  substantially  dependent on the success of the business
itself  (which,  in turn,  is often  dependent  in part  upon  general  economic
conditions). The Company's commercial loans are usually, but not always, secured
by business assets.  However,  the collateral  securing the loans may depreciate
over time,  may be difficult to appraise and may fluctuate in value based on the
success of the business.

     The Company's  commercial lending policy includes credit file documentation
and  analysis of the  borrower's  background,  capacity  to repay the loan,  the
adequacy of the  borrower's  capital and  collateral as well as an evaluation of
other  conditions  affecting  the  borrower.  Analysis of the  borrower's  past,
present  and future  cash  flows is also an  important  aspect of the  Company's
current credit analysis.  The Company generally  obtains personal  guarantees on
its  commercial  loans.  Nonetheless,  such loans are  believed to carry  higher
credit risk than more traditional savings bank loans.

     The  Company  maintains  a $20.0  million  warehouse  line of  credit  with
Homestead Funding Corp. ("Homestead"), a mortgage company located in the Capital
District  area of New York.  Homestead  primarily  originates  residential  real
estate  loans in the  Company's  market  area.  The line of credit is secured by
assignments of the underlying mortgages. At March 31, 2001, the Company had $8.0
million  outstanding  under this  warehouse  line of credit which is included in
commercial  loans.  The Company also has an equity  investment in Homestead as a
strategic  initiative.  The line of credit to Homestead was made in the ordinary
course of business at the Company's normal credit terms, including interest rate
and collateralization.

<PAGE>


Asset Quality

     Delinquency Procedures. When a borrower fails to make a required payment on
a residential  mortgage  loan,  the Company  attempts to cure the  deficiency by
contacting the borrower. Written contacts are made after payment is 15 days past
due and, in most cases,  deficiencies are cured promptly.  If the delinquency is
not cured by the 30th day,  the  Company  attempts  to contact  the  borrower by
telephone  to arrange  payment of the  delinquency.  If these  efforts  have not
resolved the  delinquency  within 45 days after the due date,  a second  written
notice  is sent to the  borrower,  and on the 60th  day a notice  is sent to the
borrower  warning that  foreclosure  proceedings  will be  commenced  unless the
delinquent  amount  is paid.  If the  delinquency  has not been  cured  within a
reasonable  period of time  after the  foreclosure  notice  has been  sent,  the
Company may obtain a forbearance  agreement or may institute  appropriate  legal
action to foreclose upon the property. If foreclosed,  property  collateralizing
the loan is sold at a public sale and may be purchased  by the  Company.  If the
Company is in fact the successful  bidder at the foreclosure  sale, upon receipt
of a deed to the  property,  the  Company  generally  sells the  property at the
earliest possible date.

     Collection efforts on consumer and commercial real estate loans are similar
to efforts on residential  mortgage  loans,  except that  collection  efforts on
consumer and commercial  real estate loans  generally begin within 15 days after
the  payment  date is  missed.  In the  case of  manufactured  home  loans,  the
Company's  agreement with Tammac requires Tammac to provide collection  services
on any loan  that is more  than 30 days past due.  The  Company  also  maintains
periodic  contact with  commercial  loan  customers and monitors and reviews the
borrowers'  financial statements and compliance with debt covenants on a regular
basis.

     Real  estate  and  other  assets  acquired  by the  Company  as a result of
foreclosure or by deed-in-lieu of foreclosure or repossession  are classified as
Other Real Estate  Owned  ("OREO") and  Repossessed  Property  until sold.  When
property is classified as OREO and Repossessed  Property,  it is recorded at the
lower of the recorded  investment in the loan or fair value (net of  disposition
costs) at that date and any  writedown  resulting  therefrom  is  charged to the
allowance  for loan  losses.  Subsequent  writedowns  are  charged to  operating
expenses.  Net expenses  from OREO and  repossessed  properties  are expensed as
incurred.  See the "Nonperforming Assets" table on page 21 of the Company's 2001
Annual Report to  Shareholders  attached  hereto as Exhibit 13 and  incorporated
herein by reference.

     Other Loans of Concern.  As of March 31,  2001,  there were $7.1 million of
other loans not  included in the  category  of  nonperforming  loans where known
information  about the possible  credit or other  problems of  borrowers  caused
management  to have  doubts as to the  ability of the  borrower  to comply  with
present loan repayment terms.  These loans have been considered by management in
conjunction with the analysis of the adequacy of the allowance for loan losses.

     Allowance  for Loan  Losses.  At March 31,  2001,  the  Company had a total
allowance for loan losses of $22.3  million,  representing  2.53% of total loans
and 259.96% of total  nonperforming  loans. See the "Loan Loss Experience" table
on page 22 of the Company's 2001 Annual Report to  Shareholders  attached hereto
as Exhibit 13 and incorporated herein by reference.


<PAGE>



Allocation of the Allowance for Loan Losses

     The  following  table sets forth the  allocation  of the allowance for loan
losses by  category  as prepared by the  Company.  This  allocation  is based on
management's  assessment as of a given point in time of the risk characteristics
of each of the  component  parts of the total loan  portfolio  and is subject to
changes as and when the risk factors of each such  component  part  change.  The
allocation  is not  indicative  of  either  the  specific  amounts  or the  loan
categories in which future  charge-offs may be taken,  nor should it be taken as
an indicator  of future loss trends.  The  allocation  of the  allowance to each
category  does not  restrict the use of the  allowance  to absorb  losses in any
category.

<TABLE>
<CAPTION>
                                                                           At March 31,
                                     ---------------------------------------------------------------------
                                              2001                   2000                    1999
                                     ---------------------------------------------------------------------
                                                  Percent                Percent                 Percent
(Dollars in thousands)                            Of Loans               Of Loans                Of Loans
                                     Allowance    In Each    Allowance   In Each    Allowance    In Each
                                      For Loan    Category   For Loan    Category    For Loan    Category
                                       Losses     To Total    Losses     To Total     Losses     To Total
                                                   Loans                  Loans                   Loans
                                     ---------    --------   ---------   --------   ---------    --------
<S>                                 <C>           <C>        <C>         <C>         <C>         <C>
Allocation of allowance for
  loan losses:
 Residential real estate (1)        $ 5,937        59.5%     $ 5,015      60.8%      $ 2,989      51.7%
 Commercial real estate               5,435        19.0        4,154      16.9         2,782      15.8
 Manufactured housing loans           4,647         8.6        3,281       9.9         3,147      15.6
 Commercial loans                     1,707         6.9          811       4.5           871       5.0
 Financed insurance premiums          1,733         4.3        2,263       6.3         2,332      10.0
 Consumer loans                         590         2.0          354       1.9           346       2.2
 Unearned discount and net
  deferred loan origination
  fees and costs                         --        (0.3)          --      (0.3)           --      (0.3)
 Unallocated                          2,276          --        3,730        --         1,829        --
                                    -------       -----      -------     -----       -------     -----
       Total                        $22,325       100.0%     $19,608     100.0%      $14,296     100.0%
                                    =======       =====      =======     =====       =======     =====


<CAPTION>
                                          At March 31,
                                    ------------------------------------------------
                                              1998                    1997
                                    ------------------------------------------------
                                                  Percent                 Percent
(Dollars in thousands)                            Of Loans                Of Loans
                                      Allowance   In Each    Allowance    In Each
                                      For Loan    Category    For Loan    Category
                                       Losses     To Total     Losses     To Total
                                                   Loans                   Loans
                                      --------    --------   ---------    --------
<S>                                    <C>        <C>        <C>           <C>
Allocation of allowance for
  loan losses:
 Residential real estate (1)           $1,457      54.1%      $  998        56.2%
 Commercial real estate                 1,756      15.1          758        13.7
 Manufactured housing loans             2,550      19.2        1,040        18.8
 Commercial loans                         517       3.7        1,833         4.0
 Financed insurance premiums            1,027       5.5        1,127         4.8
 Consumer loans                           225       2.3           52         2.3
 Unearned discount and net
  deferred loan origination
  fees and costs                           --       0.1           --         0.2
 Unallocated                              695        --           64          --
                                       ------     -----       ------       -----
       Total                           $8,227     100.0%      $5,872       100.0%
                                       ======     =====       ======       =====


</TABLE>


-------------
(1)  Includes home equity and construction loans.


<PAGE>



Investment Activities

     The  Company is  authorized  to invest in various  types of liquid  assets,
including  United States  Treasury  obligations,  securities of various  federal
agencies,   certain  certificates  of  deposit  of  insured  banks  and  savings
institutions,  certain bankers'  acceptances,  repurchase agreements and federal
funds. Subject to various  restrictions,  the Company may also invest its assets
in investment grade commercial paper, mortgage-backed securities, collateralized
mortgage obligations  (CMO's),  corporate debt securities and mutual funds whose
assets conform to the  investments  that the Company is otherwise  authorized to
make directly.  As of March 31, 2001, the Company did not hold any securities to
one issuer which  exceeded 10% of equity,  excluding  securities  issued by U.S.
Government agencies.

     Generally,  the  investment  policy of the Company is to invest funds among
various  categories of investments and maturities  based upon the Company's need
for liquidity, to fulfill the Company's  asset/liability  management policies to
achieve the proper  balance  between its desire to  minimize  risk and  maximize
yield,  and, to a much lesser extent, to provide  collateral for borrowings.  To
date, the Company's  investment  strategy has been directed toward  high-quality
assets (primarily federal agency obligations, mortgage-backed securities, CMO's,
and high-grade corporate debt securities).

     Management  determines the appropriate  classification of securities at the
time of purchase.  See Note 3 of the Notes to Consolidated  Financial Statements
included in the Company's 2001 Annual Report to Shareholders incorporated herein
by reference as Exhibit 13.


<PAGE>



     The  following  table  sets  forth  information   regarding  the  scheduled
     maturities,  amortized cost, and weighted-average  yields for the Company's
     securities portfolios at March 31, 2001 by contractual maturity.  The table
     does not take into  consideration  the effects of scheduled  repayments  or
     possible prepayments.


<TABLE>
<CAPTION>
                                        --------------------------------------------------------------------------------------------
                                          Less than 1 year           1 to 5 years          5 to 10 years           Over 10 years
                                        --------------------------------------------------------------------------------------------
 (Dollars in thousands)                             Weighted                  Weighted             Weighted                Weighted
                                        Amortized   Average     Amortized     Average   Amortized  Average     Amortized   Average
                                          Cost       Yield        Cost         Yield      Cost      Yield         Cost       Yield
                                        ---------   --------    ---------     --------  ---------  --------    ---------   --------
<S>                                       <C>       <C>          <C>            <C>       <C>        <C>        <C>           <C>
Securities Available for Sale:
  U.S. Government and
    Agency securities ..................   $   --     --%       $ 8,692         6.68%     $6,663     6.58%      $ 22,033     7.03%
  Corporate debt securities ............    4,996   6.21         19,882         6.92          --       --         35,842     7.43
  Tax-exempt securities ................       --     --             --           --          49     7.51         15,236     4.92
  Collateralized mortgage obligations ..       --     --             --           --          --       --         74,314     6.55
  Mortgage-backed securities ...........       --     --             54         7.37         912     7.98         23,658     6.67
  Equity securities ....................       --     --             --           --          --       --            560     2.27
  Other securities .....................      586   4.98            100         5.60          --       --             --       --
                                           ------   ----        -------         ----      ------     ----       --------     ----
    Total Securities
      Available for Sale ...............   $5,582   6.08%       $28,728         6.84%     $7,624     6.75%      $171,643     6.65%
                                           ======   ====        =======         ====      ======     ====       ========     ====

Securities Held to Maturity:
  Corporate debt securities ............   $1,000   7.11%       $   995         6.57%     $   --       --%      $     --       --%
  Tax-exempt securities ................       --     --             10         9.30          --       --             --       --
  Collateralized mortgage obligations ..       --     --             --           --          --       --            376     6.61
  Mortgage-backed securities ...........       58   6.00            834         7.08         197     7.98            132     9.42
                                           ------   ----        -------         ----      ------     ----       --------     ----
    Total Securities Held
      to Maturity ......................   $1,058   7.05%       $ 1,839         6.82%     $  197     7.98%      $    508     7.34%
                                           ======   ====        =======         ====      ======     ====       ========     ====


<CAPTION>
                                        -----------------------------------
                                                   Total Securities
                                        -----------------------------------
 (Dollars in thousands)                                Weighted
                                           Amortized   Average      Fair
                                             Cost       Yield       Value
                                           ---------   --------     -----
<S>                                        <C>           <C>      <C>
Securities Available for Sale:
  U.S. Government and
    Agency securities ...............      $ 37,387      6.87%    $ 37,468
  Corporate debt securities .........        60,720      7.16       59,969
  Tax-exempt securities .............        15,285      4.93       15,280
  Collateralized mortgage obligations        74,314      6.55       74,876
  Mortgage-backed securities ........        24,624      6.72       24,879
  Equity securities .................           561      2.27          728
  Other securities ..................           686      5.07          686
                                           --------      ----     --------
    Total Securities
      Available for Sale ............      $213,577      6.67%    $213,886
                                           ========      ====     ========


Securities Held to Maturity:
  Corporate debt securities .........      $  1,995      6.84%    $  2,017
  Tax-exempt securities .............            10      9.30           10
  Collateralized mortgage obligations           377      6.61          376
  Mortgage-backed securities ........         1,220      7.42        1,256
                                           --------      ----     --------
    Total Securities Held
      to Maturity ...................      $  3,602      7.02%    $  3,659
                                           ========      ====     ========
</TABLE>




<PAGE>


Sources of Funds

     General. The Company's primary sources of funds are deposits,  amortization
and  prepayment  of  loan  principal,  maturities,   prepayments  and  calls  of
securities,  short-term  investments,  and funds  provided from  operations  and
borrowings.

     Deposits.  The Company offers a variety of deposit  accounts having a range
of interest  rates and terms.  The  Company's  deposits  consist of passbook and
statement savings accounts,  money market and N.O.W accounts,  and time deposits
generally  ranging in terms from three  months to five years.  The Company  only
solicits  deposits  from its  primary  market  area  and does not have  brokered
deposits.   The  Company  relies  primarily  on  competitive  pricing  policies,
advertising and customer service to attract and retain these deposits.  At March
31, 2001, the Company's deposits totaled $750.2 million, of which $687.6 million
were interest-bearing deposits.

     The flow of  deposits  is  influenced  significantly  by  general  economic
conditions,   changes  in  money  market  and  prevailing  interest  rates,  and
competition.  The variety of deposit accounts offered by the Company has allowed
it to be  competitive  in  obtaining  funds and to respond with  flexibility  to
changes  in  consumer  demand.  The  Company  has  become  more  susceptible  to
short-term fluctuations in deposit flows, as customers have become more interest
rate conscious.  The Company manages the pricing of its deposits in keeping with
its asset/liability management, liquidity and profitability objectives. Based on
its experience,  the Company  believes that its passbook and statement  savings,
money  market  accounts  and N.O.W  accounts are  relatively  stable  sources of
deposits.  However,  the  ability of the Company to attract  and  maintain  time
deposits and the rates paid on these  deposits has been and will  continue to be
significantly affected by market conditions.

     The  following  table  indicates,  as of March 31, 2001,  the amount of the
Company's time deposits of $100,000 or more by time remaining until maturity.

<TABLE>
<CAPTION>
                                                                           Maturity
                                             ----------------------------------------------------------------------
                                               3 Months       3 to 6      6 to 12         Over
   (In thousands)                               or Less       Months       Months       12 Months       Total
                                                -------       ------       ------       ---------       -----
<S>                                             <C>           <C>         <C>            <C>          <C>
   Time deposits of $100,000 or more........    $ 11,945      $9,182      $ 16,487       $ 17,461     $ 55,075
</TABLE>

     Borrowings.  Although  deposits are the Company's  primary source of funds,
the  Company's  practice  has been to  utilize  borrowings  when they are a less
costly  source of funds,  can be invested at a positive  interest rate spread or
when the Company needs additional funds to satisfy loan demand.

     The  Company's  borrowings   historically  have  consisted  principally  of
short-term  advances and long-term  borrowings  from the FHLB of New York.  Such
advances  and  borrowings  can be made  pursuant  to  several  different  credit
programs,  each of which has its own interest rate and range of maturities.  The
Company  currently   maintains  available  lines  of  credit  and  is  currently
authorized  to borrow up to $100.0  million on lines of credit  with the FHLB of
New York.  At March 31,  2001,  the Company had  outstanding  $194.9  million in
short-term advances and long-term borrowings from the FHLB of New York. See Note
7 of the Notes to Consolidated  Financial  Statements  included in the Company's
2001 Annual Report to Shareholders  incorporated  herein by reference as Exhibit
13. The Company may increase its borrowings in order to fund the  acquisition of
additional  securities  or other  assets in the  future or as part of merger and
acquisition activities.


<PAGE>


Subsidiary Activities

     Hudson City  Associates,  Inc. Hudson City  Associates,  Inc.  ("HCAI"),  a
wholly  owned  subsidiary  of the Bank,  was  incorporated  in 1984 but remained
inactive until 1990. In 1990, HCAI formed a partnership known as Premium Payment
Plan  (referred  to herein as "PPP"),  pursuant  to which the  Company  provides
premium   financing  for  both  certain   lines  of  commercial   insurance  and
non-standard and sub-standard personal automobile insurance.

     Hudson City Centre, Inc. A wholly owned subsidiary of the Bank, Hudson City
Centre,  Inc. ("HCCI"),  was organized in 1985 to facilitate the construction of
the Bank's  main office  building.  Pursuant  to this  objective,  HCCI formed a
partnership  known as Sixth Street  Development  Associates to build and hold as
its primary  asset the Bank's main  office  building at One Hudson City  Centre,
Hudson, New York.

     Hudson  River  Mortgage  Corporation.  A  wholly  owned  subsidiary  of the
Company,  Hudson River  Mortgage  Corporation  ("HRMC") was organized in 1996 to
broker mortgages to the Company and other financial institutions.

     Hudson River  Funding Corp.  Hudson River Funding Corp.  ("HRFC") is a Real
Estate  Investment Trust formed in 1997 to enhance  liquidity,  portfolio yields
and capital growth.  The Bank initially  funded HRFC with  approximately  $185.0
million of earning assets consisting of residential  mortgage loans,  commercial
real  estate  loans,  home  equity  loans,  home  improvement  loans,  and  debt
securities. Interest income earned on the assets held by HRFC, less expenses, is
distributed to the Bank in the form of dividends.

     SSLA Services  Corp.  SSLA Services  Corp.  ("SSLA")  became a wholly-owned
subsidiary of Hudson River Bank & Trust Company in September 1999 as a result of
the  acquisition of SFS Bancorp,  Inc.,  parent  company of Schenectady  Federal
Savings Bank. Since its acquisition, SSLA has conducted no business.

     C. W. Bostwick,  Inc. C. W. Bostwick,  Inc.  ("Bostwick") is a full-service
insurance  agency which provides more than 25 major carriers of personal,  group
and commercial insurance who offer insurance for life, home, property,  personal
liability,  long-term  care,  disability  and  annuities  for  retirement to our
customer  base.  The Company made an equity  investment in Bostwick in September
1999. In January 2001,  the Company  exercised its option to acquire  additional
equity  in  Bostwick,   and  consequently,   the  Company  became  the  majority
shareholder of Bostwick and Bostwick became a subsidiary of the Company.

Competition

     The Company faces strong  competition,  both in originating real estate and
other loans and in attracting  deposits.  Competition in originating real estate
loans comes primarily from other savings institutions,  commercial banks, credit
unions and mortgage  bankers  making loans secured by real estate located in the
Company's  primary market area. Other savings  institutions,  commercial  banks,
credit unions,  and finance companies  provide vigorous  competition in consumer
and commercial lending. The Company also faces strong competition in its efforts
to  provide  insurance  premium  financing  through  PPP from a variety of other
lenders, some of which have much greater assets and resources than the Company.

     The  Company  attracts  all of its  deposits  through  its branch  offices,
primarily  from the  communities  in which those  branch  offices  are  located;
therefore,  competition  for those  deposits is  principally  from mutual funds,
annuities,  stocks,  bonds, and other securities and other savings institutions,
commercial banks and credit unions located in the same communities.  The Company
competes  for these  deposits  by  offering  a variety of  deposit  accounts  at
competitive  rates,  convenient  business hours, and convenient branch locations
with  interbranch  deposit and withdrawal  privileges.  Automated teller machine
facilities are also available.

Employees

     At March 31, 2001, the Company had 260 full-time employees and 40 part-time
employees.  The  Company's  employees  are  not  represented  by any  collective
bargaining group. Management considers its employee relations to be good.


<PAGE>

                                   REGULATION

     Set  forth  below  is a  brief  description  of the  laws  and  regulations
applicable  to the  Company  and the  Bank.  The  description  of the  laws  and
regulations hereunder, as well as descriptions of laws and regulations contained
elsewhere  herein,  does not  purport to be  complete  and is  qualified  in its
entirety  by  reference  to  applicable  laws and  regulations.  Legislation  is
introduced  from to time in the  United  States  Congress  that may  affect  the
operations of the Company and the Bank. In addition,  the  regulations  by which
the Company and the Bank are governed may be amended from time to time. Any such
legislator or regulatory changes could adversely affect the Bank or the Company.
No  assurance  can be made as to whether or in what form any such  changes  will
occur.

The Company

     General. The Company is subject to regulation as a savings and loan holding
company  under the Home Owners Loan Act, as amended  ("HOLA"),  instead of being
subject to regulation as a bank holding  company under the Bank Holding  Company
Act of 1956 because the Bank has made an election under Section 10(L) of HOLA to
be treated as a  "savings  bank" for  purposes  of Section  10(e) of HOLA.  As a
result,  the  Company  has  registered  with  the  OTS  and  is  subject  to OTS
regulations,  examinations,  supervision and reporting  requirements relating to
savings and loan holding companies. The Company is also required to file certain
reports with, and otherwise  comply with the rules and  regulations  of, the New
York State  Banking  Board (the "NYBB" or the  "Board") and the  Securities  and
Exchange  Commission  ("SEC").  As a  subsidiary  of a savings and loan  holding
company,  the Bank is subject to certain  restrictions  in its dealings with the
Company and affiliates thereof.

     Activities  Restrictions.  The Bank is presently  the sole savings and loan
subsidiary of the Company. There are generally no restrictions on the activities
of a savings and loan holding  company which holds only one  subsidiary  savings
institution.  However,  if the  Director  of the OTS  determines  that  there is
reasonable  cause to believe that the continuation by a savings and loan holding
company of an  activity  constitutes  a serious  risk to the  financial  safety,
soundness or  stability of its  subsidiary  savings  institution,  he or she may
impose such restrictions as are deemed necessary to address such risk, including
limiting (i) payment of dividends by the savings institution;  (ii) transactions
between the savings institution and its affiliates;  and (iii) any activities of
the savings institution that might create a serious risk that the liabilities of
the  Company  and its  affiliates  may be  imposed on the  savings  institution.
Notwithstanding the above rules as to permissible business activities of unitary
savings and loan holding  companies,  if the savings  institution  subsidiary of
such a holding  company fails to meet the qualified  thrift lender ("QTL") test,
then such unitary  holding  company also shall become  subject to the activities
restrictions  applicable  to multiple  savings and loan holding  companies  and,
unless the savings institution  requalifies as a QTL within one year thereafter,
shall register as, and become subject to the restrictions  applicable to, a bank
holding company.

     If the  Company  were to acquire  control of another  savings  institution,
other than  through  merger or other  business  combination  with the Bank,  the
Company  would  thereupon  become a multiple  savings and loan holding  company.
Except where such acquisition is pursuant to the authority to approve  emergency
thrift  acquisitions and where each subsidiary savings institution meets the QTL
test,  as set  forth  below,  the  activities  of  the  Company  and  any of its
subsidiaries  (other  than the Bank or other  subsidiary  savings  institutions)
would  thereafter be subject to further  restrictions.  Among other  things,  no
multiple  savings and loan holding company or subsidiary  thereof which is not a
savings  institution  shall  commence or continue  for a limited  period of time
after becoming a multiple savings and loan holding company or subsidiary thereof
any business  activity  other than:  (i)  furnishing  or  performing  management
services for a subsidiary  savings  institution;  (ii)  conducting  an insurance
agency or escrow business; (iii) holding,  managing, or liquidating assets owned
by or acquired from a subsidiary savings  institution;  (iv) holding or managing
properties used or occupied by a subsidiary savings  institution;  (v) acting as
trustee under deeds of trust; (vi) those activities  authorized by regulation as
of  March  5,  1987 to be  engaged  in by  multiple  savings  and  loan  holding
companies;  or (vii) unless the Director of the OTS by  regulation  prohibits or
limits such activities for savings and loan holding companies,  those activities
authorized  by  the  FRB  as  permissible  for  bank  holding  companies.  Those
activities described in clause (vii) above also must be approved by the Director
of the OTS prior to being  engaged in by a  multiple  savings  and loan  holding
company.

<PAGE>

     Qualified Thrift Lender Test. Under Section 2303 of the Economic Growth and
Regulatory  Paperwork  Reduction Act of 1996, a savings  association  can comply
with  the QTL test by  either  meeting  the QTL  test set  forth in the HOLA and
implementing   regulations  or  qualifying  as  a  domestic  building  and  loan
association as defined in Section  7701(a)(19)  of the Internal  Revenue Code of
1986, as amended.

     The  QTL  test  set  forth  in the  HOLA  requires  that  qualified  thrift
investments   ("QTLs")   represent  65%  of  portfolio  assets  of  the  savings
institution and its consolidated  subsidiaries.  Portfolio assets are defined as
total assets less  intangibles,  property used by a savings  association  in its
business and  liquidity  investments  in an amount not  exceeding 20% of assets.
Generally,  QTLs are residential  housing  related  assets.  The 1996 amendments
allow small  business  loans,  credit card  loans,  student  loans and loans for
personal,  family and household  purposes to be included  without  limitation as
qualified  investments.  At March 31, 2001,  the Bank's assets  invested in QTLs
were in excess of the percentage required to qualify the Bank under the QTL test
in effect at that time.

     Limitations on Transactions with Affiliates.  Transactions  between savings
institutions  and their  affiliates  are governed by Sections 23A and 23B of the
Federal  Reserve Act. An affiliate  of a savings  institution  is any company or
entity which  controls,  is  controlled  by or is under common  control with the
savings  institution.  In a holding  company  context,  the parent  company of a
savings institution (such as the Company) and any companies which are controlled
by such parent  company are  affiliates of the savings  institution.  Generally,
Sections  23A and 23B (i) limit the extent to which the savings  institution  or
its subsidiaries may engage in "covered  transactions" with any one affiliate to
an amount equal to 10% of such  institution's  capital  stock and  surplus,  and
contain an aggregate  limit on all such  transactions  with all affiliates to an
amount equal to 20% of such capital  stock and surplus and (ii) require that all
such transactions be on terms substantially the same, or, at least as favorable,
to the institution or subsidiary as those provided to a non-affiliate.  The term
"covered transaction" includes the making of loans, purchase of assets, issuance
of a guarantee and other similar transactions.

     In  addition,  Sections  22(g)  and (h) of the  Federal  Reserve  Act place
restrictions   on  loans  to  executive   officers,   directors   and  principal
stockholders.  Under Section 22 (h), loans to a director,  an executive  officer
and to a greater  than 10%  stockholder  of a savings  institution,  and certain
affiliated  interests  of  either,  may not  exceed,  together  with  all  other
outstanding  loans  to  such  person  and  affiliated  interests,   the  savings
institution's  loans  to  one  borrower  limit  (generally  equal  to 15% of the
institution's unimpaired capital and surplus).  Section 22(h) also requires that
loans to directors,  executive  officers and principal  stockholders  be made on
terms  substantially  the same as offered in  comparable  transactions  to other
persons unless the loans are made pursuant to a benefit or compensation  program
that (i) is widely  available to employees of the  institution and (ii) does not
give preference to any director,  executive officer or principal stockholder, or
certain  affiliated  interests  of either,  over other  employees of the savings
institution. Section 22(h) also requires prior board approval for certain loans.
In  addition,  the  aggregate  amount  of  extensions  of  credit  by a  savings
institution to all insiders cannot exceed the institution's  unimpaired  capital
and surplus. Furthermore,  Section 22(g) places additional restrictions on loans
to executive officers. At March 31, 2001, the Company was in compliance with the
above restrictions.

     Restrictions on Acquisitions.  Except under limited circumstances,  savings
and loan holding companies are prohibited from acquiring, without prior approval
of the OTS,  (i) control of any other  savings  institution  or savings and loan
holding company or substantially  all the assets thereof or (ii) more than 5% of
the voting shares of a savings  institution or holding  company thereof which is
not a  subsidiary.  Except  with the prior  approval  of the OTS, no director or
officer of a savings and loan holding company or person owning or controlling by
proxy or otherwise more than 25% of such company's stock, may acquire control of
any savings institution,  other than a subsidiary savings institution, or of any
other savings and loan holding company.

     The OTS may only  approve  acquisitions  resulting  in the  formation  of a
multiple savings and loan holding company which controls savings institutions in
more  than one  state if (i) the  multiple  savings  and  loan  holding  company
involved  controls a savings  institution which operated a home or branch office
located in the state of the institution to be acquired as of March 5, 1987; (ii)
the  acquirer  is  authorized  to  acquire  control of the  savings  institution
pursuant  to  the  emergency  acquisition  provisions  of  the  Federal  Deposit
Insurance  Act  ("FDIA");  or (iii)  the  statutes  of the  state  in which  the
institution to be acquired is located  specifically  permit  institutions  to be
acquired  by the  state-chartered  institutions  or  savings  and  loan  holding
companies  located in the state where the  acquiring  entity is located (or by a
holding company that controls such state chartered savings institutions).

<PAGE>

     Federal  Securities Laws. The Company's Common Stock is registered with the
SEC under Section 12(g) of the Exchange Act. The Company is subject to the proxy
and tender offer rules, insider trading reporting requirements and restrictions,
and certain other requirements under the Exchange Act.

     Shares of Common Stock  purchased by persons who are not  affiliates of the
Company may  generally  be sold  without  registration.  Shares  purchased by an
affiliate of the Company  generally may not be resold without complying with the
resale  restrictions  of Rule 144 under the Securities Act. If the Company meets
the current  public  information  requirements  of Rule 144 under the Securities
Act,  each  affiliate of the Company who complies  with the other  conditions of
Rule 144  (including  those that require the  affiliate's  sale to be aggregated
with those of certain other persons) would be able to sell in the public market,
without  registration,  a number of shares  not to  exceed,  in any  three-month
period,  the greater of (i) 1% of the outstanding  shares of the Company or (ii)
the average  weekly volume of trading in such shares  during the preceding  four
calendar weeks.


The Bank

     General. The Bank is subject to extensive regulation and examination by the
New York State Banking Department ("NYSBD"), as its chartering authority, and by
the  Federal  Deposit  Insurance  Corporation  ("FDIC"),  as the  insurer of its
deposits  and is  subject to certain  requirements  established  by the OTS as a
result of the Company's savings and loan holding company status. The federal and
state  laws and  regulations  which are  applicable  to banks and their  holding
companies  regulate,  among other  things,  the scope of their  business,  their
investments,  their reserves against deposits, the timing of the availability of
deposited  funds and the nature and amount of and  collateral for certain loans.
The Bank must file reports with the NYSBD and the FDIC concerning its activities
and financial condition,  in addition to obtaining regulatory approvals prior to
entering into certain  transactions  such as  establishing  branches and mergers
with, or  acquisitions  of, other  depository  institutions.  There are periodic
examinations  by the  NYSBD  and the FDIC to test  the  Bank's  compliance  with
various regulatory  requirements.  This regulation and supervision establishes a
comprehensive  framework of activities in which an institution can engage and is
intended primarily for the protection of the insurance fund and depositors.  The
regulatory structure also gives the regulatory  authorities extensive discretion
in connection with their supervisory and enforcement  activities and examination
policies,  including  policies with respect to the  classification of assets and
the  establishment of adequate loan loss reserves for regulatory  purposes.  Any
change in such regulation,  whether by the NYSBD, the FDIC or as a result of the
enactment of legislation,  could have a material  adverse impact on the Company,
the Bank and their operations.

     Capital  Requirements.  The FDIC has promulgated  regulations and adopted a
statement of policy  regarding the capital  adequacy of  state-chartered  banks,
which,  like the Bank, are not members  ("non-members")  of the Federal  Reserve
System. See Note 8 of the Notes to Consolidated Financial Statements included in
the  Company's  2001  Annual  Report  to  Shareholders  incorporated  herein  by
reference as Exhibit 13.

     Activities and Investments of New  York-Chartered  Savings Banks.  The Bank
derives  its  lending,   investment  and  other  authority  primarily  from  the
applicable provisions of New York State Banking Law and regulations,  as limited
by FDIC  regulations and other federal laws and  regulations.  The New York laws
and regulations  authorize savings banks,  including the Bank, to invest in real
estate  mortgages,   consumer  and  commercial  loans,  certain  types  of  debt
securities,  including  certain  corporate debt  securities  and  obligations of
federal,  State and local  governments and agencies,  certain types of corporate
equity  securities and certain other assets.  Under the statutory  authority for
investing in equity securities, a savings bank may directly invest up to 7.5% of
its  assets in  certain  corporate  stock and may also  invest up to 7.5% of its
assets  in  certain  mutual  fund  securities.  Investment  in stock of a single
corporation  is  limited to the  lesser of 2% of the  outstanding  stock of such
corporation or 1% of the savings bank's assets,  except as set forth below. Such
equity  securities must meet certain tests of financial  performance.  A savings
bank's  lending  powers are not  subject  to  percentage  of asset  limitations,
although  there are limits  applicable to single  borrowers.  A savings bank may
also,  pursuant  to the  "leeway"  authority,  make  investments  not  otherwise
permitted  under  the  New  York  State  Banking  Law.  This  authority  permits
investments  in otherwise  impermissible  investments of up to 1% of the savings
bank's assets in any single investment,  subject to certain  restrictions and to
an aggregate limit for all such investments of up to 5% of assets. Additionally,
in lieu of investing in such securities in accordance with the reliance upon the
specific  investment  authority  set forth in the New York  State  Banking  Law,
savings  banks  are  authorized  to elect to  invest  under a  "prudent  person"
standard in a wider range of debt and equity securities as compared to the types
of investments permissible under such

<PAGE>

specific  investment  authority.  However, in the event a savings bank elects to
utilize the "prudent person" standard,  it will be unable to avail itself of the
other  provisions  of the New York State Banking Law and  regulations  which set
forth specific investment authority. A New York chartered stock savings bank may
also exercise trust powers upon approval of the Department.

     New York-chartered savings bank may also invest in subsidiaries under their
service  corporation  investment  power.  A savings  bank may use this  power to
invest in corporations that engage in various activities  authorized for savings
banks,  plus any additional  activities  which may be authorized by the New York
Banking Board ("NYBB"). Investment by a savings bank in the stock, capital notes
and  debentures  of its  service  corporations  is  limited  to 3% of the bank's
assets,  and such  investments,  together  with the bank's  loans to its service
corporations, may not exceed 10% of the savings bank's assets.

     With certain limited exceptions,  a New York-chartered savings bank may not
make loans or extend  credit for  commercial,  corporate  or  business  purposes
(including lease financing) to a single borrower,  the aggregate amount of which
would be in excess of 15% of the bank's net worth.  The Bank currently  complies
with all applicable loans-to-one-borrower limitations.

     Activities  and  Investments of  FDIC-Insured  State-Chartered  Banks.  The
activities and equity  investments of  FDIC-insured,  state-chartered  banks are
generally  limited to those  that are  permissible  for  national  banks.  Under
regulations dealing with equity investments, an insured state bank generally may
not directly or indirectly acquire or retain any equity investment of a type, or
in an amount, that is not permissible for a national bank. An insured state bank
is not  prohibited  from,  among other  things,  (i)  acquiring  or  retaining a
majority  interest in a  subsidiary,  (ii)  investing as a limited  partner in a
partnership  the sole purpose of which is direct or indirect  investment  in the
acquisition,  rehabilitation or new construction of a qualified housing project,
provided  that such  limited  partnership  investments  may not exceed 2% of the
bank's total assets,  (iii) acquiring up to 10% of the voting stock of a company
that solely provides or reinsures directors',  trustees' and officers' liability
insurance coverage or bankers' blanket bond group insurance coverage for insured
depository institutions,  and (iv) acquiring or retaining the voting shares of a
depository  institution  if  certain  requirements  are  met.  In  addition,  an
FDIC-insured  state-chartered  bank may not directly,  or  indirectly  through a
subsidiary,  engage as "principal" in any activity that is not permissible for a
national bank unless the FDIC has determined that such activities  would pose no
risk to the insurance fund of which it is a member and the bank is in compliance
with applicable regulatory capital requirements.

     Regulatory   Enforcement   Authority.   Applicable   banking  laws  include
substantial  enforcement  powers available to federal banking  regulators.  This
enforcement authority includes,  among other things, the ability to assess civil
money  penalties,  to issue  cease-and-desist  or removal orders and to initiate
injunctive  actions against  banking  organizations  and  institution-affiliated
parties, as defined. In general,  these enforcement actions may be initiated for
violations  of laws and  regulations  and  unsafe or  unsound  practices.  Other
actions or inactions  may provide the basis for  enforcement  action,  including
misleading or untimely reports filed with regulatory authorities.

     Under the New York State Banking Law, the  Department may issue an order to
a New  York-chartered  banking  institution  to appear and  explain an  apparent
violation of law, to discontinue  unauthorized  or unsafe  practices and to keep
prescribed  books  and  accounts.  Upon a  finding  by the  Department  that any
director or officer of any banking  organization  has  violated  any law, or has
continued  unauthorized  or unsafe  practices in conducting  the business of the
banking organization after having been notified by the Department to discontinue
such  practices,  such  director,  or officer may be removed  from office by the
Department  after notice and an opportunity to be heard.  The Bank does not know
of any past or current  practice,  condition or violation that might lead to any
proceeding  by the  Department  against  the  Bank  or any of its  directors  or
officers.  The  Department  also may take  possession of a banking  organization
under specified statutory criteria.

     Prompt  Corrective  Action.  Section 38 of the FDIA  provides  the  federal
banking  regulators  with  broad  power to take  "prompt  corrective  action" to
resolve  the  problems  of  undercapitalized  institutions.  The  extent  of the
regulators'   powers   depends  on  whether  the   institution  in  question  is
"well-capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized" or "critically undercapitalized." Under regulations adopted by
the  federal  banking  regulators,  an  institution  shall be  deemed  to be (i)
"well-capitalized"  if it has total  risk-based  capital ratio of 10.0% or more,
has a Tier I  risk-based  capital  ratio of 6.0% or more,  has a Tier I leverage
capital  ratio of 5.0% or more and is not subject to specified  requirements  to
meet and  maintain  a  specific  capital  level for any  capital  measure,  (ii)
"adequately  capitalized" if it has a total risk-based  capital ratio of 8.0% or
more,  a Tier I risk-based  capital  ratio of 4.0% or more and a Tier I leverage
capital  ratio of 4.0% or more (3.0% under certain  circumstances)  and does not
meet the definition of

<PAGE>


"well-capitalized,"  (iii)  "undercapitalized"  if  it  has a  total  risk-based
capital ratio that is less than 8.0%, a Tier I risk-based  capital ratio that is
less than 4.0% or a Tier I leverage  capital  ratio that is less than 4.0% (3.0%
under certain circumstances),  (iv) "significantly undercapitalized" if it has a
total  risk-based  capital  ratio  that is less than 6.0%,  a Tier I  risk-based
capital ratio that is less than 3.0% or a Tier I leverage  capital ratio that is
less  than  3.0%,  and (v)  "critically  undercapitalized"  if it has a ratio of
tangible  equity  to  total  assets  that is  equal to or less  than  2.0%.  The
regulations also provide that a federal banking  regulator may, after notice and
an opportunity  for a hearing,  reclassify a  "well-capitalized"  institution as
"adequately capitalized" and may require an "adequately capitalized" institution
or an "undercapitalized" institution to comply with supervisory actions as if it
were in the next lower  category if the  institution  is in an unsafe or unsound
condition  or engaging  in an unsafe or unsound  practice.  The federal  banking
regulator  may  not,  however,  reclassify  a  "significantly  undercapitalized"
institution as "critically undercapitalized."

     An institution generally must file a written capital restoration plan which
meets specified requirements,  as well as a performance guaranty by each company
that controls the  institution,  with an appropriate  federal banking  regulator
within 45 days of the date that the institution  receives notice or is deemed to
have notice that it is "undercapitalized,"  "significantly  undercapitalized" or
"critically  undercapitalized."  Immediately upon becoming undercapitalized,  an
institution  becomes subject to statutory  provisions which, among other things,
set forth various mandatory and discretionary  restrictions on the operations of
such an institution.

     At March 31,  2001,  the Bank had capital  levels  which  qualified it as a
"well-capitalized" institution.

     FDIC  Insurance  Premiums.  The Bank is a member of the Bank Insurance Fund
("BIF")  administered  by the FDIC but has accounts  insured by both the BIF and
the Savings Association  Insurance Fund ("SAIF").  The SAIF-insured accounts are
held by the Bank as a result of certain  acquisitions and branch  purchases.  As
insurer,  the FDIC is  authorized  to  conduct  examinations  of, and to require
reporting by, FDIC-insured  institutions.  It also may prohibit any FDIC-insured
institution  from engaging in any activity the FDIC  determines by regulation or
order to pose a serious threat to the FDIC.

     The FDIC may  terminate  the deposit  insurance  of any insured  depository
institution,  including  the Bank,  if it  determines  after a hearing  that the
institution has engaged or is engaging in unsafe or unsound practices,  is in an
unsafe  or  unsound  condition  to  continue  operations,  or has  violated  any
applicable law, regulation,  order or any condition imposed by an agreement with
the FDIC. It also may suspend deposit insurance  temporarily  during the hearing
process for the permanent  termination of insurance,  if the  institution has no
tangible  capital.  If insurance of accounts is terminated,  the accounts at the
institution at the time of the termination,  less subsequent  withdrawals  shall
continue to be insured for a period of six months to two years, as determined by
the FDIC. Management is aware of no existing  circumstances,  which would result
in termination of the Bank's deposit insurance.

     Community  Investment and Consumer  Protection Laws. In connection with its
lending activities, the Bank is subject to a variety of federal laws designed to
protect  borrowers  and  promote  lending to various  sectors of the economy and
population.  Included among these are the federal Home Mortgage  Disclosure Act,
Real Estate  Settlement  Procedures  Act,  Truth-in-Lending  Act,  Equal  Credit
Opportunity  Act,  Fair Credit  Reporting  Act and  Community  Reinvestment  Act
("CRA").

     The CRA requires  insured  institutions to define the communities that they
serve,  identify the credit needs of those communities and adopt and implement a
"Community  Reinvestment  Act  Statement"  pursuant  to which they offer  credit
products  and  take  other  actions  that  respond  to the  credit  needs of the
community.  The responsible  federal banking regulator (in the case of the Bank,
the  FDIC)  must  conduct  regular  CRA   examinations   of  insured   financial
institutions and assign to them a CRA rating of  "outstanding,"  "satisfactory,"
"needs  improvement"  or  "unsatisfactory."  The  Bank's  current  CRA rating is
"satisfactory."

     The Bank is also subject to  provisions  of the New York State  Banking Law
which impose  continuing and affirmative  obligations upon banking  institutions
organized  in New York  State to serve the credit  needs of its local  community
("NYCRA"), which are similar to those imposed by the CRA. Pursuant to the NYCRA,
a bank must file an annual  NYCRA  report and copies of all  federal CRA reports
with  the  NYSBD.  The  NYCRA  requires  the  NYSBD  to make an  annual  written
assessment of a bank's compliance with the NYCRA, utilizing a four-tiered rating
system,  and make such  assessment  available  to the  public.  The  NYCRA  also
requires  the NYSBD to consider a bank's  NYCRA  rating when  reviewing a bank's
application  to  engage  in  certain  transactions,   including  mergers,  asset
purchases and the  establishment of branch offices or automated teller machines,
and  provides  that such  assessment  may serve as a basis for the denial of any
such  application.  The Bank's  latest NYCRA rating  received from the NYSBD was
"satisfactory."

<PAGE>

     Limitations  on  Dividends.  The  Company is a legal  entity  separate  and
distinct from the Bank. The Company's  principal  source of revenue  consists of
dividends  from the Bank.  The  payment of  dividends  by the Bank is subject to
various regulatory requirements.

     Under New York State Banking Law and OTS regulations,  a New York-chartered
stock savings bank may declare and pay dividends out of its net profits,  unless
there is an impairment of capital, but approval of the Department is required if
the total of all dividends declared in a calendar year would exceed the total of
its net  profits for that year  combined  with its  retained  net profits of the
preceding two years, subject to certain adjustments.

     Federal Home Loan Bank ("FHLB") System. The Bank is a member of the FHLB of
New York,  which is one of 12 regional FHLBs that administers the home financing
credit  function  of  savings  institutions.  Each FHLB  serves as a reserve  or
central bank for its members within its assigned region.  It is funded primarily
from  proceeds  derived from the sale of  consolidated  obligations  of the FHLB
System.  It makes loans to members (i.e.,  advances) in accordance with policies
and  procedures  established by the Board of Directors of the FHLB. The Bank had
$194.9 million of FHLB short-term advances and long-term borrowings at March 31,
2001.

     As an FHLB member,  the Bank is required to purchase and maintain  stock in
the FHLB of New York in an amount equal to at least 1% of its  aggregate  unpaid
residential  mortgage loans, home purchase  contracts or similar  obligations at
the  beginning  of each  year or 5% of its  advances  from the FHLB of New York,
whichever  is  greater.  At March 31,  2001,  the Bank had  approximately  $12.1
million in FHLB stock, which resulted in its compliance with this requirement.

     The FHLBs are  required  to provide  funds for the  resolution  of troubled
savings  institutions  and to contribute to affordable  housing programs through
direct loans or interest subsidies on advances targeted for community investment
and  low-  and  moderate-income  housing  projects.   These  contributions  have
adversely  affected  the  level of FHLB  dividends  paid in the  past and  could
continue to do so in the future.  These contributions also could have an adverse
effect on the value of FHLB stock in the future.

     Federal  Reserve  System.  The FRB requires all depository  institutions to
maintain  reserves  against  their  transaction   accounts  (primarily  checking
accounts,  including  N.O.W. and Super N.O.W.  accounts) and  non-personal  time
deposits.  As of March 31, 2001, the Company was in compliance  with  applicable
requirements.  However, because required reserves must be maintained in the form
of vault cash or a  noninterest-bearing  account at a Federal  Reserve Bank, the
effect of this reserve requirement is to reduce an institution's earning assets.

Federal Taxation

     General. The Company and the Bank are subject to federal income taxation in
the same general manner as other  corporations  with some  exceptions  discussed
below.  The  following  discussion  of  federal  taxation  is  intended  only to
summarize   certain   pertinent   federal  income  tax  matters  and  is  not  a
comprehensive description of the tax rules applicable to the Company. The Bank's
federal  income tax returns  have been  audited or closed  without  audit by the
Internal Revenue Service through December 31, 1996.

     Method  of  Accounting.  For  federal  income  tax  purposes,  the  Company
currently  reports its income and expenses on the accrual  method of  accounting
and uses a tax year ending March 31 for filing its  consolidated  federal income
tax returns.  For further  information about the Federal income tax consequences
for the Company,  see Note 12 of the Notes to Consolidated  Financial Statements
within the Company's 2001 Annual Report to Shareholders  incorporated  herein by
reference as Exhibit 13.

State and Local Taxation

     New York  State  Taxation.  The  Company  and the Bank  report  income on a
combined basis utilizing the Company's fiscal year. New York State Franchise Tax
on banking  corporations is currently  imposed in an amount equal to the greater
of  (a)  9% of  "entire  net  income"  allocable  to New  York  State  (b) 3% of
"alternative  entire net  income"  allocable  to New York State (c) 0.01% of the
average value of assets  allocable to New York State or (d) nominal minimum tax.
Entire  net  income is based on  federal  taxable  income,  subject  to  certain
modifications.

     Delaware State Taxation.  As a Delaware  holding company not earning income
in Delaware,  the Company is exempt from  Delaware  corporate  income tax but is
required to file an annual  report with and pay an annual  franchise  tax to the
State of Delaware. The tax is imposed as a percentage of the capital base of the
Company with an annual maximum of $150,000.

<PAGE>

Executive Officers

     The executive  officers of the Company are elected annually and hold office
until their  respective  successors  have been  elected and  qualified  or until
death, resignation or removal by the Board of Directors.  Each executive officer
of the  Company  is  also  an  executive  officer  of  the  Bank.  There  are no
arrangements  or  understandings  between the persons named and any other person
pursuant to which such officers were selected.


                Name         Age        Position Held with the Bank
     --------------------- ------- ------------------------------------------

     Carl A. Florio           52        President & Chief Executive Officer

     Timothy E. Blow          34        Chief Financial Officer

     Sidney D. Richter        61        Executive Vice President

     James F. Mackerer        52        Senior Vice President

     Carol J. Dube            46        Senior Vice President


     The  business  experience  of  each  executive  officer  who is not  also a
Director of the Company is set forth below.

     Carl A. Florio,  CPA. Mr. Florio was appointed  President & Chief Executive
Officer in 1996.  From 1991 to 1996,  Mr. Florio  served as the Company's  Chief
Financial  Officer.  Prior to this appointment as Chief Financial  Officer,  Mr.
Florio was a partner at the accounting firm of Pattison, Koskey, Rath & Florio.

     Timothy E. Blow,  CPA.  Mr.  Blow  became  Chief  Financial  Officer of the
Company in May 1997.  Prior to his appointment as Chief Financial  Officer,  Mr.
Blow was a senior  manager at the  accounting  firm of KPMG LLP.  Mr.  Blow also
serves as a director  of Hudson  City  Associates,  Inc.  and as  Secretary  and
Treasurer of Hudson River Funding Corp., wholly owned subsidiaries of the Bank.

     Sidney D.  Richter.  Appointed to  Executive  Vice  President in 2000,  Mr.
Richter served as the Company's Senior Vice President of Lending from 1993-2000.
From  1990 to  1993,  Mr.  Richter  served  as the  Bank's  Vice  President  for
Commercial Lending.  Mr. Richter also serves as a director of each of the Bank's
wholly owned subsidiaries.

     James F.  Mackerer.  Mr.  Mackerer  became Senior Vice  President of Retail
Sales,  Marketing and Facilities of the Company in February  2001.  Prior to his
appointment  to Senior  Vice  President,  Mr.  Mackerer  was Vice  President  of
Commercial Lending and has been with the Company since 1993.

     Carol J. Dube.  Ms. Dube became Senior Vice  President of Operations of the
Company in January 2000.  From 1994 to 1999,  Ms. Dube served as the Bank's Vice
President of Information Technology.  Prior to her employment with the Bank, Ms.
Dube was  employed  by Fleet Bank as an officer  in the  information  technology
area.


<PAGE>



Item 2. Properties
        ----------

     The Company  conducts its business at its main office and  seventeen  other
banking  offices.  The net book value of the  Company's  premises and  equipment
(including land,  buildings and leasehold  improvements and furniture,  fixtures
and  equipment) at March 31, 2001 was $19.1 million.  The Company  believes that
its current facilities are adequate to meet the present and foreseeable needs of
the Company and the Bank, subject to possible future expansion.

Item 3. Legal Proceedings
        -----------------

     The Company is involved as plaintiff or defendant in various  legal actions
arising in the normal  course of its  business.  While the  ultimate  outcome of
these  proceedings  cannot  be  predicted  with  certainty,   management,  after
consultation with counsel representing the Company in the proceedings,  does not
expect that the resolution of these  proceedings  will have a material effect on
the Company's financial condition or results of operations.

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

     None.


<PAGE>




                                     PART II

Item 5. Market for Registrant's Common Equity and
        Related Shareholder Matters
        -----------------------------------------

     Inside back cover of the attached  2001 Annual  Report to  Shareholders  is
herein incorporated by reference and attached hereto as Exhibit 13.

Item 6. Selected Financial Data
        -----------------------

     Page 13 of the  attached  2001  Annual  Report  to  Shareholders  is herein
incorporated by reference and attached hereto as Exhibit 13.

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

     Pages 14 through 27 of the attached 2001 Annual Report to Shareholders  are
herein incorporated by reference and attached hereto as Exhibit 13.

Item 7a. Quantitative and Qualitative Disclosures
         About Market Risk
         ----------------------------------------

     Pages 23 through 24 of the attached 2001 Annual Report to Shareholders  are
herein incorporated by reference and attached hereto as Exhibit 13.

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

     The  following  information  appearing in the  Company's  Annual  Report to
Shareholders  for the year ended March 31, 2001, is incorporated by reference in
this Annual Report on Form 10-K and attached hereto as Exhibit 13.

<TABLE>
<CAPTION>
                                                                                                                Pages in
                                                                                                                 Annual
                                                                                                                 Report
                                                                                                                 ------
<S>                                                                                                             <C>
Independent Auditors' Report................................................................................       28
Consolidated Balance Sheets as of March 31, 2001 and 2000...................................................       29
Consolidated Income Statements for the Years Ended March 31, 2001,  2000 and 1999...........................       30
Consolidated Statements of Changes in Shareholders' Equity for Years Ended March 31, 2001, 2000 and 1999           31
Consolidated Statements of Cash Flows for Years Ended March 31, 2001, 2000 and 1999.........................       32
Notes to Consolidated Financial Statements..................................................................    33 to 52
</TABLE>

     With the exception of the aforementioned information,  the Company's Annual
Report to Shareholders for the year ended March 31, 2001, is not deemed filed as
part of this Annual Report on Form 10-K.

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

         None.

<PAGE>

                                    PART III

Item 10.  Directors, Executive Officers, Promoters and
          Control Persons; Compliance with Section 16(a)
          of the Exchange Act
          ---------------------------------------------

         Directors

     Information  concerning  Directors of the Company is incorporated herein by
reference  from  the  definitive  Proxy  Statement  for the  Annual  Meeting  of
Shareholders  to be held in 2001,  a copy of which  will be filed not later than
120 days after the close of the fiscal year.

         Executive Officers

     Information  concerning  Executive  Officers of the Company is incorporated
herein by reference from Part I of this Annual Report on Form 10-K.

         Compliance with Section 16(a)

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors  and  executive  officers,  and  persons  who own  more  than 10% of a
registered  class  of the  Company's  equity  securities,  to file  with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater than
10%  stockholders  are  required by SEC  regulation  to furnish the Company with
copies of all Section 16(a) forms they file.

     To the Company's knowledge,  based solely on a review of the copies of such
reports  furnished  to the  Company and  written  representations  that no other
reports were required,  during the fiscal year ended March 31, 2001, all Section
16(a) filing requirements applicable to its officers, directors and greater than
10 percent beneficial owners were complied with.

Item 11.  Executive Compensation
          ----------------------

     Information  concerning  executive  compensation is incorporated  herein by
reference  from  the  definitive  Proxy  Statement  for the  Annual  Meeting  of
Shareholders  to be held in 2001,  a copy of which  will be filed not later than
120 days after the close of the fiscal year.

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

     Information  concerning security ownership of certain beneficial owners and
management  is  incorporated  herein  by  reference  from the  definitive  Proxy
Statement for the Annual Meeting of  Shareholders  to be held in 2001, a copy of
which will be filed not later than 120 days after the close of the fiscal year.

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

     Information  concerning certain  relationships and related  transactions is
incorporated  herein by reference  from the definitive  Proxy  Statement for the
Annual Meeting of Shareholders to be held in 2001, a copy of which will be filed
not later than 120 days after the close of the fiscal year.

<PAGE>

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

         (a)  Exhibits
<TABLE>
<CAPTION>
               -------------------------------------------------------------- --------------------------
    Regulation                                                                           Reference to
       S-K                                                                              Prior Filing or
     Exhibit                                                                            Exhibit Number
      Number                                  Document                                  Attached Hereto
    ----------                                --------                                  ---------------
<S>                 <C>                                                                       <C>
       3(i)         Certificate of Incorporation                                               *
      3(ii)         Bylaws                                                                    ****
        4           Instruments defining the rights of security holders,                       *
                    including debentures
        10          Material Contracts
                        Employment Agreement between Hudson River Bank &                       *
                           Trust Company and certain executive officers
                        Employment Agreement between Hudson River Bancorp.,                    *
                           Inc. and certain executive officers
                        Change-In-Control Severance Agreement with certain                     *
                           officers of Hudson River Bank & Trust Company
                        Hudson River Bank & Trust Company Employee                             *
                            Severance Compensation Plan
                        Employee Stock Ownership Plan                                          *
                        Form of Hudson City Savings Institution 401(k)                         **
                           Savings Plan
                        Benefit Restoration Plan                                               **
                        1998 Stock Option and Incentive Plan                                  ***
                        1998 Recognition and Retention Plan                                   ***
        13          Annual Report to Shareholders                                             13
        21          Subsidiaries of Registrant                                                21
        23          Consent of Independent Auditors                                           23
</TABLE>

----------------
*    Filed as exhibits to the Company's Form S-1 registration statement filed on
     March 9, 1998 (File No. 333-47605) under the Securities Act of 1933. All of
     such previously filed documents are hereby incorporated herein by reference
     in accordance with Item 601 of Regulation S-K.

**   Filed as exhibits to the Company's  Pre-effective Amendment No. One to Form
     S-1 filed on May 1, 1998 (File No.  333-47605)  under the Securities Act of
     1933. All of such previously filed documents are hereby incorporated herein
     by reference in accordance with Item 601 of Regulation S-K.

***  Filed as exhibits to the Company's  Proxy  Statement  filed on November 13,
     1998 in connection with the Company's  Special Meeting for Shareholders and
     hereby incorporated by reference.

**** Filed as  exhibits  to the  Company's  Annual  Report  on Form 10-K for the
     fiscal year ended March 31, 1999 under the  Securities  and Exchange Act of
     1934,  filed  with the SEC on June 28,  1999,  and  incorporated  herein by
     reference in accordance with Item 601 of Regulation S-K.  Amendments to the
     Company's  bylaws were filed as exhibits to the  Company's  current  report
     filed on Form 10-K on May 14, 2001, and incorporated herein by reference.

         (b)  Financial Statement Schedules

     All   financial   statement   schedules  are  omitted  since  the  required
information  is either not  applicable,  is  immaterial  or is  included  in the
consolidated financial statements of the Company and notes thereto in the Annual
Report.

          (c)  Reports on Form 8-K

<PAGE>

     A  current  report  on Form  8-K was  filed  with  the SEC on May 11,  2001
regarding the acquisition of Cohoes Bancorp, Inc.

     A  current  report  on Form  8-K was  filed  with  the SEC on May 14,  2001
regarding an amendment to the Company's bylaws.

     A  current  report on Form 8-K was  filed  with the SEC on May 17,  2001 to
announce the appointment of M. Bruce Cohen to the Company's Board of Directors.

     A  current  report  on Form  8-K was  filed  with  the SEC on May 30,  2001
announcing the date of the Company's annual meeting.

<PAGE>

                                   SIGNATURES

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

                    HUDSON RIVER BANCORP, INC.

                    By:
                         ------------------------------------------------------
                         Carl A. Florio, President and Chief Executive Officer
                         (Duly Authorized Representative)


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


-------------------------------------    ---------------------------------------
Carl A. Florio, Director, President      Earl Schram, Jr., Chairman of the Board
and Chief Executive Officer
(Principal  Executive and Operating
Officer)
                                         Date: June 29, 2001
Date: June 29, 2001                            ---------------------------------
      -------------------------------

-------------------------------------    ---------------------------------------
Stanley Bardwell, M.D., Director         Joseph W. Phelan, Director

Date: June 29, 2001                      Date: June 29, 2001
      -------------------------------          ---------------------------------

-------------------------------------    ---------------------------------------
William E. Collins, Director             William H. Jones, Director

Date: June 29, 2001                      Date: June 29, 2001
      -------------------------------          ---------------------------------

-------------------------------------    ---------------------------------------
Joseph H. Giaquinto, Director            M. Bruce Cohen, Director

Date: June 29, 2001                      Date: June 29, 2001
      -------------------------------          ---------------------------------

-------------------------------------    ---------------------------------------
Marilyn A. Herrington, Director          Timothy E. Blow, Chief Financial
                                         Officer  (Principal Financial and
                                         Accounting Officer)

Date: June 29, 2001                      Date: June 29, 2001
      -------------------------------          ---------------------------------

-------------------------------------
Harry L. Robinson, Director

Date: June 29, 2001
      -------------------------------