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, 1999

                                       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 14,  1999,  there  were  issued and  outstanding  17,090,250
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 14, 1999, was approximately $191.2 million.

                       DOCUMENTS INCORPORATED BY REFERENCE

      Part II of Form 10-K - Annual Report to Shareholders for the fiscal
      year ended March 31, 1999. Part III of Form 10-K - Portions of Proxy
      Statement for 1999 Annual Meeting of Shareholders.
<PAGE>
                                     PART I

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

                             BUSINESS OF THE COMPANY
General
         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  shareholder  of the  Bank,  is a  savings  and loan  holding  company
regulated by the OTS.

         The Company is an operating  company.  The Company  directs,  plans and
coordinates the business  activities of the Bank. In the future, the Company may
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 10K for the year ended March 31,
1999,  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 10 of the  Company's  Annual  Report  to  Shareholders  attached  hereto by
Exhibit 13 and incorporated herein by reference.

Market Area

         The Bank's  primary  market area is comprised  of Columbia,  Albany and
Rensselaer  Counties  in New York  and  portions  of  Dutchess  and  Schenectady
Counties 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.
<PAGE>
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, 1999,
the Company's total loan portfolio totaled  approximately  $578.1 million.

         Loan  applications  are  initially  considered  and approved at various
levels of  authority,  depending  on the type and  amount  of the loan.  Company
employees  with  lending  authority  are  designated,  and their  lending  limit
authority defined, by the Board of Directors of the Company. The approval of the
Company's  Board of Directors is required for any loans over $500,000.  Pursuant
to the Company's lending policy, senior lending officers may approve loans up to
$200,000  individually and up to $500,000 as a committee.  The Company generally
requires  personal  guarantees for all  commercial  and  commercial  real estate
loans.

         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 17 of
the Company's 1999 Annual Report to  Shareholders  attached hereto by Exhibit 13
and incorporated herein by reference.

         The  following  table  illustrates  the  contractual  maturity  of  the
Company's  construction,  commercial real estate,  and commercial loans at March
31, 1999.  Mortgages which have  adjustable or  renegotiable  interest rates are
shown as maturing in the period  during  which the contract is due. The schedule
does  not  reflect  the  effects  of  possible  prepayments  or  enforcement  of
due-on-sale clauses.
<PAGE>
<TABLE>
<CAPTION>
               (In thousands)                 Construction     Commercial       Commercial          Total
                                                 Loans         Real Estate         Loans            Loans
                                                                  Loans
                                              -------------    -------------    -------------    ------------
<S>                                           <C>              <C>              <C>              <C>

               Amounts  Due:
               0 months to 1 year....         $        650     $     10,593     $     20,182     $    31,425

               After 1 year:
                 1 to 5 years........                    -           43,694            6,790           50,484
                 Over 5 years........                4,310           37,193            2,052           43,555
                                              -------------    -------------    -------------    ------------
               Total due after one year              4,310           80,887            8,842           94,039
                                              -------------    -------------    -------------    ------------
               Total amount due......         $      4,960     $     91,480     $     29,024     $    125,464
                                              ============     ============     ============     ============
</TABLE>
         The  following  table sets forth the dollar  amounts in the  respective
loan category at March 31, 1999 that are contractually due after March 31, 2000,
and whether such loans have fixed interest rates or adjustable interest rates.
<TABLE>
<CAPTION>
                                                  Due after March 31, 2000
                                           -------------------------------------
(In thousands)                              Fixed        Adjustable       Total
                                           -------       ----------       -----
<S>                                        <C>            <C>            <C>
Construction loans ................        $  --          $ 4,310        $ 4,310

Commercial real estate loans ......         40,196         40,691         80,887

Commercial loans ..................          1,721          7,121          8,842
                                           -------        -------        -------
    Total .........................        $41,917        $52,122        $94,039
                                           =======        =======        =======
</TABLE>
<PAGE>
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, 1999, $293.9 million,  or 50.8% 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  one-  and   three-year   residential
adjustable-rate mortgage (ARM) loans with an interest rate that adjusts annually
in the  case of  one-year  ARM  loans,  and  every  three  years  in the case of
three-year ARM loans 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 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, 1999, 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.
<PAGE>
         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 over
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
to ten years, with a payback period ranging from five to twenty years.

Commercial Real Estate Lending

         The Company  has engaged in  commercial  real  estate  lending  secured
primarily by apartment buildings, office buildings, motels, nursing homes, strip
shopping centers and manufactured housing parks located in the Company's primary
market area. At March 31, 1999, the Company had $91.5 million of commercial real
estate loans, representing 15.8% 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 are  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 expand  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, 1999, the Company's portfolio of
manufactured  housing loans totaled  $90.4  million,  or 15.6% 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
substantially less than the loan balance. At the time of origin, inspections are
made to substantiate current market values on all manufactured homes.
<PAGE>
         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 nine states,  but does business  primarily in New York, New
Jersey  and  Pennsylvania.  Management  estimates  that  approximately  8.0%  of
premiums financed are for non-standard and sub-standard (assigned risk) personal
automobile  insurance and the remaining 92% 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
eight 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 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,  1999,  the  Company had $57.9
million of financed  insurance  premiums through PPP,  representing 10.0% 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.
<PAGE>
Commercial Loans

         At March 31, 1999, commercial loans comprised $29.0 million, or 5.0% 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
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 a few  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., 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,  1999,  the  Company  had  $9.6  million
outstanding  under  this  warehouse  line  of  credit  which  is  included  with
commercial  loans.  During the year ended March 31,  1999,  the Company  made an
equity investment in Homestead Funding Corp. 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 cost 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 18 of the Company's  1999 Annual  Report to  Shareholders
attached hereto by Exhibit 13 and incorporated herein by reference.

         Other Loans of Concern.  As of March 31, 1999,  there were $4.3 million
of other loans not included in the category of non-performing  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.

         There were no other  loans in excess of $1.0  million  being  specially
monitored by the Company as of March 31, 1999.  These loans have been considered
by management in conjunction  with the analysis of the adequacy of the allowance
for loan losses.
<PAGE>
         Allowance for Loan Losses. The allowance for loan losses is replenished
through a provision  for loan losses  charged to  operations.  Loans are charged
against  the  allowance  for  loan  losses  when  management  believes  that the
collectibility  of the  principal is unlikely.  Recoveries  on loans  previously
charged-off  are credited to the allowance for loan losses.  The allowance is an
amount that  management  believes  will be adequate to absorb losses on existing
loans that may become uncollectible.  Management's evaluation of the adequacy of
the  allowance  for loan losses is performed on a periodic  basis and takes into
consideration  such factors as the historical loan loss  experience,  changes in
the nature and volume of the loan portfolio,  overall portfolio quality,  review
of  specific  problem  loans and  current  economic  conditions  that may affect
borrowers' ability to pay.

         Although   management  believes  that  it  uses  the  best  information
available to determine the allowance,  unforeseen market conditions could result
in adjustments and net earnings could be significantly affected if circumstances
differ  substantially  from the assumptions used in determining the level of the
allowance.  Future  additions to the Company's  allowance  will be the result of
periodic loan,  property and collateral  reviews and thus cannot be predicted in
advance.  In  addition,   regulatory  agencies,  as  an  integral  part  of  the
examination  process,  periodically  review  the  Company's  allowance  for loan
losses.  Such  agencies  may require the Company to  recognize  additions to the
allowance based upon their judgment of the information  available to them at the
time of their examination.  At March 31, 1999, the Company had a total allowance
for loan losses of $14.3 million,  representing  143.8% of total  non-performing
loans.  See the "Loan Loss  Experience"  table on page 13 of the Company's  1999
Annual Report to  Shareholders  attached  hereto by Exhibit 13 and  incorporated
herein by reference.

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.
<PAGE>
<TABLE>
<CAPTION>
                                                                          At March 31,
                              ---------------------------------------------------------------------------------------------------
                                     1999                  1998               1997                 1996                1995
                              ------------------   ------------------  ------------------  ------------------  ------------------
                              Allowance  Percent    Allowance Percent  Allowance  Percent   Allowance  Percent  Allowance  Percent
                              For Loan  Of Loans    For Loan  Of Loans For Loan   Of Loans  For Loan   Of Loans For Loan   Of Loans
(Dollars in thousands)         Losses   In Each     Losses    In Each   Losses    In Each     Losse    In Each   Losses    In Each
                                        Category              Category            Category             Category            Category
                                        To Total              To Total            To Total             To Total            To Total
                                         Loans                 Loans               Loans               Loans               Loans
                              ---------  -------    -------- --------  ---------  -------   ---------  -------  ---------  -------
<S>                           <C>          <C>     <C>          <C>    <C>          <C>    <C>          <C>    <C>         <C>

Allocation of allowance for
     loan losses:
 Residential real estate (1)  $  2,989      51.7%  $  1,457      54.1% $   998       56.2% $    846      54.5% $    815      59.2%
 Commercial real estate          2,782      15.8      1,756      15.1       758      13.7       658      15.7       538      16.0
 Manufactured home loans         3,147      15.6      2,550      19.2     1,040      18.8     1,049      17.8       699      16.5
 Commercial loans                  871       5.0        517       3.7     1,833       4.0       213       6.5       275       4.2
 Financed insurance premiums     2,332      10.0      1,027       5.5     1,127       4.8       442       3.0       272       2.0
 Consumer loans                    346       2.2        225       2.3        52       2.3        25       2.3        24       1.9
 Net deferred loan costs
      and unearned discount          -      (0.3)         -       0.1         -       0.2         -       0.2         -       0.2
 Unallocated                     1,829         -        695         -        64         -       313         -       564         -
                              --------  --------   --------  --------  --------  --------  --------  --------  --------  --------

       Total                  $ 14,296     100.0%  $  8,227     100.0% $  5,872     100.0% $  3,546     100.0% $  3,187     100.0%
                              ========  ========   ========  ========  ========  ========  ========  ========  ========  ========
</TABLE>
-------------
(1)  Includes construction loans.


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, 1999, the Company did not hold any securities to
one issuer which exceeded 10% of equity, excluding securities issued by U.S.
Government agencies.
<PAGE>
         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.  If  management  has the intent and  ability to hold debt
securities to maturity,  they are stated at amortized  cost.  If securities  are
purchased for the purpose of selling them in the near term,  they are classified
as trading  securities  and are reported at fair value with  unrealized  holding
gains and losses  reflected in current  earnings.  All other debt and marketable
equity  securities  are  classified  as  securities  available  for sale and are
reported at fair value,  with net unrealized  gains or losses  reported,  net of
income taxes, as a separate  component of equity. As a member of the FHLB of New
York, the Company is required to hold FHLB of New York stock which is carried at
cost since there is no readily available market value. Historically, the Company
has not held any securities considered to be trading securities.
<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, 1999 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
                             ---------------------------------------------------------------------------------
                             Amortized  Weighted  Amortized  Weighted Amortized  Weighted Amortized  Weighted
                                Cost    Average     Cost     Average    Cost     Average     Cost    Average
                                         Yield                Yield               Yield               Yield
                              --------  --------   --------  --------  --------  --------  --------  --------
<S>                            <C>           <C>       <C>        <C>   <C>           <C>   <C>           <C>
(Dollars in thousands)

Securities Available-for-
   Sale:
 U.S. Government and
   Agency securities ........  $      -       --%     6,998      6.31% $ 39,792      6.52% $ 20,186      7.00%
 Corporate debt securities ..    1,999      7.43     11,198      6.32     6,043      6.44    36,188      6.51
 Tax-exempt securities ......        -        --          -        --         -        --    15,131      4.90
 Collateralized mortgage
   obligations ..............        -        --          -        --         -        --    85,434      6.57
 Mortgage-backed securities .        -        --          -        --         -        --    19,678      6.53
 Equity securities ..........        -        --          -        --         -        --     1,160      6.42
                              --------  --------   --------  --------  --------  --------  --------  --------
    Total securities
        available for sale .. $  1,999      7.43%  $ 18,196      6.31% $ 45,835      6.51% $177,777     6.46%
                              ========  ========   ========  ========  ========  ========  ========  ========
Securities Held-to-Maturity:
 U.S. Government and
    Agency securities........ $      -        --%  $  1,995      7.06% $      -        --% $      -        --%
 Corporate debt securities ..    8,989      6.80      8,942      6.67         -        --         -        --
 Tax-exempt securities               -        --          -        --        10      9.31         -        --
 Collateralized mortgage
   obligations ..............        -        --          -        --         -        --       968      6.34
 Mortgage-backed securities
                                     -        --        189      6.07     1,746      6.81       202      9.39
                              --------  --------   --------  --------  --------  --------  --------  --------
     Total securities held
        to maturity.......   $   8,989     6.80%   $ 11,126      6.73%    1,756      6.77% $  1,170      6.87%
                              ========  ========   ========  ========  ========  ========  ========  ========
(continued)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                             -----------------------------
                                   Total Securities
                             -----------------------------
                             Amortized  Weighted   Fair
                                Cost    Average    Value
                                         Yield
                              --------  --------  --------
<S>                            <C>      <C>       <C>
(Dollars in Thousands)

Securities Available-for-
   Sale:
 U.S. Government and
   Agency securities ........ $ 66,976      6.64%  $66,447
 Corporate debt securities ..   55,428      6.49    55,012
 Tax-exempt securities ......   15,131      4.90    15,053
 Collateralized mortgage ....
   obligations ..............   85,434      6.57    85,405
 Mortgage-backed securities .   19,678      6.53    19,498
 Equity securities ..........
                                 1,160        --     1,196
                              --------  --------  --------
    Total securities
        available for sale .. $243,807      6.43% $242,611
                              ========  ========  ========
Securities Held-to-Maturity:
 U.S. Government and
    Agency securities........ $  1,995      7.06% $  2,012

 Corporate debt securities ..   17,931      6.74    18,088
 Tax-exempt securities              10      9.31        10
 Collateralized mortgage
   obligations ..............      968      6.34       940
 Mortgage-backed securities
                                 2,137      6.99     2,185
                              --------  --------  --------
     Total securities held
        to maturity.......    $ 23,041      6.77% $ 23,235
                              ========  ========  ========
</TABLE>
<PAGE>
Sources of Funds

         General.   The  Company's   primary  sources  of  funds  are  deposits,
amortization  and  prepayment  of  loan  principal,  maturities  of  securities,
short-term investments, 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, 1999, the Company's deposits totaled $591.8 million, of which $547.9 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, 1999, 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........  $  9,538     $ 5,313    $ 9,391        $ 15,635     $ 39,877
</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 of advances from
the FHLB of New York.  Such advances 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 $99.4 million on lines of credit with the
FHLB of New York. At March 31, 1999, the Company had  outstanding  $27.6 million
in borrowings from the FHLB of New York. See Note 6 of the Notes to Consolidated
Financial   Statements   included  in  the  Company's   1999  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  non-standard  and  sub-standard   personal   automobile
insurance and certain lines of commercial 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  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 is passed through
to the Bank in the form of dividends.

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  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 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,  1999,  the Company  had 257  full-time  employees  and 44
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. No assurance can be given, however, that
under certain  circumstances,  other laws and regulations will not be applicable
to and materially  affect 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.

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 Company Act
of 1956 because the Bank has made an election  under Section 10(1) of HOLA to be
treated as a "savings  bank" for purposes of Section 10(e) of HOLA. As a result,
the Company will be required to register with the OTS and will be subject to OTS
regulations,  examinations,  supervision and reporting  requirements relating to
savings and loan  holding  companies.  The Company will also be 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 will be 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.
<PAGE>
         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.

         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.  A savings  bank  subsidiary  of a savings  and loan  holding
company  that does not comply with the QTL test must  comply with the  following
restrictions  on its  operations:  (i) the institution may not engage in any new
activity  or make  any new  investment,  directly  or  indirectly,  unless  such
activity or investment is permissible  for a national  bank;  (ii) the branching
powers of the institution shall be restricted to those of a national bank, (iii)
the institution  shall not be eligible to obtain any advances from its FHLB; and
(iv)  payment  of  dividends  by the  institution  shall be subject to the rules
regarding  payment of dividends by a national bank. Upon the expiration of three
years from the date the savings institution ceases to meet the QTL test, it must
cease any activity and not retain any investment not  permissible for a national
bank and immediately  repay any outstanding FHLB advances (subject to safety and
soundness considerations).

         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, 1999,  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.
<PAGE>
         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, 1999, 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.
<PAGE>
         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).

         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 NYSBD, as its chartering  authority,  and by the 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.
<PAGE>
         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 Footnote 7 of the March 31, 1999 consolidated  financial  statements
included in the Company's 1999 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 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 banks 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 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.
<PAGE>
         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,  trustee 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,  trustee 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.
<PAGE>
         Prompt Corrective  Action.  Section 38 of the Federal Deposit Insurance
Act ("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  "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, 1999, 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.
<PAGE>
         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 Department. The NYCRA requires the Department 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  Department  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
Department was "satisfactory."

         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  including a  requirement,  as a result of the
Company's  savings and loan  holding  company  status,  that the Bank notify the
Director of the OTS not less than 30 days in advance of any proposed declaration
by its directors of a dividend.
<PAGE>
         Under New York State  Banking Law, 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.

         Miscellaneous.  The Bank is subject to certain restrictions on loans to
the bank or its non-bank subsidiaries, on investments in the stock or securities
thereof,  on the taking of such stock or securities  as collateral  for loans to
any  borrower,  and on the issuance of a guarantee or letter of credit on behalf
of the Company or its non-Company  subsidiaries.  The Company also is subject to
certain  restrictions  on most  types of  transactions  with the  Company or its
non-Company  subsidiaries,  requiring  that the  terms of such  transactions  be
substantially  equivalent to terms of similar  transactions with  non-affiliated
firms.

         Federal Home Loan Bank 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
$27.6 million of FHLB advances at March 31, 1999.

         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, 1999, the Bank had  approximately
$3.3  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 NOW and Super NOW accounts) and non-personal time deposits.
As  of  March  31,  1999,  the  Company  was  in  compliance   with   applicable
requirements.  However, because required reserves must be maintained in the form
of vault cash or a non-interest  bearing  account at a Federal Reserve Bank, the
effect of this reserve requirement is to reduce an institution's earning assets.
<PAGE>
Federal Taxation

         General.  The  Company  and the Bank will be 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
Company'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 footnote 11 of the consolidated financial statements within
the  Company's  1999  Annual  Report  to  Shareholders  incorporated  herein  by
reference as Exhibit 13.

State and Local Taxation

         New York State Taxation. The Company and the Bank will report income on
a combined  basis  utilizing  a fiscal  year.  New York State  Franchise  Tax on
corporations  is 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.

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.
<TABLE>
<CAPTION>
                        Name                 Age          Position Held with the Bank
               ------------------------- ----------- -------------------------------------
<S>                                         <C>         <C>
                Timothy E. Blow             32          Chief Financial Officer

                Sidney D. Richter           59          Senior Vice President

                Pamela M. Wood              51          Senior Vice President

</TABLE>
<PAGE>
         The business  experience  of each  executive  officer who is not also a
Director of the Company is set forth below.

         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.  Mr. Richter has served as the Company's Senior Vice
President of Lending since 1993.  From 1990 to 1993,  Mr.  Richter served as the
Company's Vice President for  Commercial  Lending.  Mr. Richter also serves as a
director of each of the Bank's wholly owned subsidiaries.

         Pamela M. Wood.  Ms. Wood has been  employed by the Company  since 1969
and has served as Senior Vice President since 1993. She also serves as Secretary
of Hudson River Mortgage  Corporation,  Hudson City Center, Inc. and Hudson City
Associates,  Inc. She served as Vice  President  from 1990 to 1993 and Corporate
Secretary  from 1990 to 1998.  From 1984 to 1990 she  served as  Assistant  Vice
President.  From  1969  to 1984  she  served  as  Administrative  Assistant  and
Executive Secretary.

Item 2.  Description of Properties
         -------------------------

         The Company  conducts  its business at its main office and twelve other
banking  offices.  The net book value of the  Company's  premises and  equipment
(including land, building and leasehold improvements and furniture, fixtures and
equipment) at March 31, 1999 was $16.8  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.
<PAGE>

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

         The Company held a special  meeting of shareholders on January 5, 1999.
At the  meeting,  proposals  to (i) ratify the  Company's  1998 Stock Option and
Incentive  Plan,  and (ii) ratify the Company's 1998  Recognition  and Retention
Plan were  approved.  The votes cast for and against  these  proposals,  and the
number  of  abstentions  and  broker  non-votes  with  respect  to each of these
proposals, were as follows:

                Approval of 1998 Stock Option and Incentive Plan
                ------------------------------------------------
   For             Against          Abstentions                Broker Non-Votes
   ---             -------          -----------                ----------------
9,036,197         1,453,321           165,641                      147,105

                 Approval of 1998 Recognition and Retention Plan
                 -----------------------------------------------
   For             Against          Abstentions                Broker Non-Votes
   ---             -------          -----------                ----------------
9,088,903          1,556,265          157,096                          -

                                     PART II

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

         Inside back cover of the attached 1999 Annual Report to Shareholders is
herein incorporated by reference as Exhibit 13.

Item 6.  Management's Discussion and Analysis of Financial
         Condition and Results of Operation
         -------------------------------------------------

         Pages  10  through  23  of the  attached  1999  Annual  Report to
Shareholders are herein incorporated by reference as Exhibit 13.
<PAGE>
Item 7.  Financial Statements

         The following  information  appearing in the Company's Annual Report to
Shareholders  for the year ended March 31, 1999, is incorporated by reference in
this Annual Report on Form 10-K as Exhibit 13.

<TABLE>
<CAPTION>
                                                                                                            Pages in
                                                                                                             Annual
                                                                                                             Report
                                                                                                            --------
<S>                                                                                                         <C>
Independent Auditors Report...........................................................................         24
Consolidated Balance Sheets as of March 31, 1999 and 1998.............................................         25
Consolidated Income Statements for the Years Ended March 31, 1999,  1998 and 1997.....................         26
Consolidated Statements of Changes in Shareholders' Equity for Years Ended March 31, 1999, 1998
 and 1997 ............................................................................................         27
Consolidated Statements of Cash Flows for Years Ended March 31, 1999, 1998 and 1997...................         28
Notes to Consolidated Financial Statements............................................................      29 to 48
</TABLE>
         With the  exception of the  aforementioned  information,  the Company's
Annual Report to  Shareholders  for the year ended March 31, 1999, is not deemed
filed as part of this Annual Report on Form 10-K.

Item 8.  Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosure
         ------------------------------------------------

         None.
<PAGE>
                                    PART III

Item 9.  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 1999,  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, 1999, all Section
16(a) filing requirements applicable to its officers, directors and greater than
10 percent beneficial owners were complied with.

Item 10.  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 1999,  a copy of which  will be filed not later than
120 days after the close of the fiscal year.
<PAGE>
Item 11.  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 1999, a copy of
which will be filed not later than 120 days after the close of the fiscal year.

Item 12.  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 1999, a copy of which will be filed
not later than 120 days after the close of the fiscal year.
<PAGE>
Item 13.  Exhibits 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                                                                   3(ii)
        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          Consents of Experts and Counsel                                           *
        27          Financial Data Schedule                                                   27
</TABLE>

----------
*        Filed as  exhibits to the  Company's  Form S-1  registration  statement
         filed on March 9, 1998 (File No.  333-47605) of 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)  of 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.

         (b)  Reports on Form 8-K

         On May 25, 1999, a current report on Form 8-K was filed with the SEC to
announce the execution of a definitive agreement to acquire SFS Bancorp, Inc.
<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: /s/ Carl A. Florio
                           -----------------------------------------------------
                           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.


/s/ Carl A. Florio                          /s/ Earl Schram, Jr.
------------------------------------        ------------------------------------
Carl  A.  Florio, Director,                 Earl Schram, Jr., Chairman of the
President  and  Chief Executive             Board
Officer (Principal Executive and
Operating Officer)

Date         June 25, 1999                  Date:         June 25, 1999
      ------------------------------              ------------------------------

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

Date         June 25, 1999                  Date:         June 25, 1999
      ------------------------------              ------------------------------

/s/ Willam E. Collins                       /s/ William H. Jones
------------------------------------        ------------------------------------
William E. Collins                          William H. Jones

Date         June 25, 1999                  Date:         June 25, 1999
      ------------------------------              ------------------------------

/s/ John E. Kelly                           /s/ Marcia M. Race
------------------------------------        ------------------------------------
John E. Kelly, Director                     Marcia M. Race, Director

Date         June 25, 1999                  Date:         June 25, 1999
      ------------------------------              ------------------------------

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

Date         June 25, 1999                  Date:         June 25, 1999
      ------------------------------              ------------------------------