UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q
(Mark One)

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

      For the quarterly period ended March 31, 1999

                                       OR

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

      For the transition period from  __________________ to _________________

                         Commission File Number 0-27716

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


          Delaware                                         13-3870836
--------------------------------------------------------------------------------
(State or other jurisdiction of                  (I.R.S. Employer Identification
incorporation or organization)                              Number)


                   6 EXECUTIVE PLAZA, YONKERS, NEW YORK 10701
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

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

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

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

CLASSES OF COMMON STOCK             NUMBER OF SHARES OUTSTANDING, MARCH 31, 1999
-----------------------             --------------------------------------------

   $0.01 Par Value                                  2,731,239




<PAGE>


                          YONKERS FINANCIAL CORPORATION
                                    FORM 10-Q
                      QUARTERLY PERIOD ENDED MARCH 31, 1999

                                                                           Page
                                                                          Number
                                                                          ------
                          PART I. FINANCIAL INFORMATION

Item 1.   Financial Statements (Unaudited)
          Consolidated Balance Sheets at March 31, 1999 and
            September 30, 1998............................................. 2
          Consolidated Statements of Income for the Three and Six Months
            Ended March 31, 1999 and 1998 ................................. 3
          Consolidated Statement of Changes in Stockholders' Equity
            for the Six Months Ended March 31, 1999 ....................... 4
          Consolidated Statements of Cash Flows for the Six Months
            Ended March 31, 1999 and 1998 ................................. 5
          Notes to Consolidated Financial Statements....................... 6
Item 2.   Management's Discussion and Analysis of
            Financial Condition and Results of Operations ................. 8
Item 3.   Quantitative and Qualitative Disclosures About
            Market Risk ...................................................23


              PART II. OTHER INFORMATION

Item 1.   Legal Proceedings ...............................................23
Item 2.   Changes in Securities ...........................................23
Item 3.   Defaults Upon Senior Securities .................................23
Item 4.   Submission of Matters to a Vote of Security Holders .............24
Item 5.   Other Information ...............................................24
Item 6.   Exhibits and Reports on Form 8-K ................................25
          Signature Page ..................................................26



<PAGE>


Part I - Item 1

                           YONKERS FINANCIAL CORPORATION AND SUBSIDIARY
                                    CONSOLIDATED BALANCE SHEETS
                                            (Unaudited)
                                 (In thousands, except share data)


<TABLE>
<CAPTION>


                                                                        March 31,      September 30,
                                                                           1999           1998
                                                                           ----           ----
<S>                                                                        <C>            <C>    
ASSETS
Cash and cash equivalents:
    Cash and due from banks                                                $ 5,177        $ 3,195
    Short-term investments                                                   4,031          1,000
                                                                        -----------    -----------
                                                                        -----------    -----------
         Total cash and cash equivalents                                     9,208          4,195
                                                                        -----------    -----------
Securities:
     Available for sale, at fair value (amortized cost of $116,590
       at March 31, 1999 and $123,317 at September 30, 1998)               116,258        125,225
     Held to maturity, at amortized cost (fair value of $27,517
       at March 31, 1999 and $43,948 at September 30, 1998)                 27,286         43,303
                                                                        -----------    -----------
                                                                        -----------    -----------
          Total securities                                                 143,544        168,528
                                                                        -----------    -----------
                                                                        -----------    -----------
Real estate mortgage loans held for sale, at lower of cost or market value   8,513         13,334
                                                                        -----------    -----------
Loans receivable, net:
     Real estate mortgage loans                                            202,014        177,783
     Consumer and commercial business loans                                  7,623          7,544
     Allowance for loan losses                                              (1,453)        (1,302)
                                                                        -----------    -----------
                                                                        -----------    -----------
          Total loans receivable, net                                      208,184        184,025
                                                                        -----------    -----------
Accrued interest receivable                                                  2,288          2,791
Federal Home Loan Bank  ("FHLB") stock                                       6,426          6,426
Office properties and equipment, net                                         1,747          1,258
Other assets                                                                 2,285          2,467
                                                                        ===========    ===========
          Total assets                                                   $ 382,195      $ 383,024
                                                                        ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
     Deposits                                                            $ 253,225      $ 231,181
     Securities repurchase agreements                                       71,012        107,790
     FHLB advances                                                          15,000             --
     Other liabilities                                                       1,208          2,251
                                                                        -----------    -----------
          Total liabilities                                                340,445        341,222
                                                                        -----------    -----------

Commitments and contingencies

Stockholders' equity:
     Preferred stock (par value $0.01 per share; 100,000
        shares authorized; none issued or outstanding)                          --             --
     Common stock (par value $0.01 per share: 4,500,000
        shares authorized; 3,570,750 shares issued)                             36             36
     Additional paid-in capital                                             35,119         35,044
     Unallocated common stock  held by employee stock
        ownership plan ("ESOP")                                             (2,000)        (2,142)
     Unamortized awards of common stock under  management
        recognition plan ("MRP")                                              (767)          (846)
     Treasury stock, at cost ( 839,511 shares at March 31, 1999 and
        844,511 shares at September 30, 1998                               (13,125)       (13,189)
     Retained income, substantially restricted                              22,686         21,754
     Accumulated other comprehensive (loss) income (note 2)                   (199)         1,145
                                                                        -----------    -----------
          Total stockholders' equity                                        41,750         41,802
                                                                        -----------    -----------
          Total liabilities and stockholders' equity                     $ 382,195      $ 383,024
                                                                        ===========    ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       2


<PAGE>
<TABLE>
<CAPTION>

                                          YONKERS FINANCIAL CORPORATION AND SUBSIDIARY
                                               CONSOLIDATED STATEMENTS OF INCOME
                                                          (Unaudited)
                                             (In thousands, except per share data)



                                                                           For the Three Months            For the Six Months
                                                                              Ended March 31,                Ended March 31,
                                                                      ----------------------------   ----------------------------
                                                                         1999            1998            1999           1998
                                                                         ----            ----            ----           ----

<S>                                                                       <C>             <C>             <C>            <C>    
Interest and dividend income:
   Loans                                                                  $ 3,785         $ 3,137         $ 7,544        $ 6,218
   Securities                                                               2,503           3,008           5,182          5,872
   Other earning assets                                                       184             101             367            210
                                                                      ------------   -------------   -------------  -------------
                                                                      ------------   -------------   -------------  -------------
     Total interest and dividend income                                     6,472           6,246          13,093         12,300
                                                                      ------------   -------------   -------------  -------------

Interest expense:
   Deposits                                                                 2,340           2,214           4,721          4,400
   Securities repurchase agreements                                         1,068           1,036           2,443          1,837
   FHLB advances                                                              171              43             180             87
                                                                      ------------   -------------   -------------  -------------
     Total interest expense                                                 3,579           3,293           7,344          6,324
                                                                      ------------   -------------   -------------  -------------

       Net interest income                                                  2,893           2,953           5,749          5,976

Provision for loan losses                                                      75              75             150            250
                                                                      ------------   -------------   -------------  -------------
       Net interest income after provision for loan losses                  2,818           2,878           5,599          5,726
                                                                      ------------   -------------   -------------  -------------
 
Non-interest income:
   Service charges and fees                                                   265             212             526            433
   Net gain on sales of real estate mortgage
      loans held for sale                                                     109              58             246            194
   Net gain (loss) on sales of securities                                      70             (37)             73            (52)
   Other                                                                       82              15              91             30
                                                                      ------------   -------------   -------------  -------------
      Total non-interest income                                               526             248             936            605
                                                                      ------------   -------------   -------------  -------------

Non-interest expense:
   Compensation and benefits                                                1,115             975           2,271          1,967
   Occupancy and equipment                                                    323             223             551            435
   Data processing service fees                                               169             128             319            259
   Federal deposit insurance costs                                             35              32              68             64
   Other                                                                      641             621           1,135          1,083
                                                                      ------------   -------------   -------------  -------------
      Total non-interest expense                                            2,283           1,979           4,344          3,808
                                                                      ------------   -------------   -------------  -------------

        Income before income tax expense                                    1,061           1,147           2,191          2,523

Income tax  expense                                                           394             459             857          1,027
                                                                      ------------   -------------   -------------  -------------

       Net income                                                           $ 667           $ 688         $ 1,334        $ 1,496
                                                                      ============   =============   =============  =============

Earnings per common share (note 3):
       Basic                                                               $ 0.27          $ 0.26          $ 0.54         $ 0.56
       Diluted                                                               0.27            0.25            0.54           0.54
                                                                      ============   =============   =============  =============
</TABLE>

See accompanying notes to consolidated financial statements.

                                       3


<PAGE>


                  YONKERS FINANCIAL CORPORATION AND SUBSIDIARY
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                   (Unaudited)
                  (Dollars in Thousands, Except Per Share Data)


<TABLE>
<CAPTION>

                                                           Unallocated  Unamortized
                                                             Common      Awards of                                      Accumulated
                                                Additional    Stock        Common                                          Other 
                                      Common     Paid-in      Held         Stock    Treasury    Retained  Comprehensive Stockholders
                                      Stock      Capital     by Esop     Under Mrp   Stock       Income    Income(loss)    Equity
                                      -----      -------     -------     ---------   -----       ------    ------------    ------
<S>                                   <C>        <C>        <C>         <C>         <C>         <C>        <C>           <C>     
Balance at September 30, 1998         $     36   $ 35,044   $ (2,142)   $   (846)   $(13,189)   $ 21,754   $  1,145      $ 41,802

  Net income                                --         --         --          --          --       1,334         --         1,334
  Dividends paid ($0.16 per share)          --         --         --          --          --        (402)        --          (402)
  Repurchased stock awarded under MRP
    (5,000 shares)                          --         --         --         (64)         64          --         --            --
  Amortization of MRP awards                --         --         --         143          --          --         --           143
  Tax benefits from vested           
    MRP awards                              --         12         --          --          --          --         --            12
  ESOP shares released for           
     allocation (14,283 shares)             --         63        142          --          --          --         --           205
  Decrease in net unrealized gain on 
     available-for-sale securities,  
     net of tax                             --         --         --          --          --          --     (1,344)       (1,344)

                                      ========   ========   ========    ========    ========    ========   ========      ========
Balance at March 31, 1999             $     36   $ 35,119   $ (2,000)   $   (767)   $(13,125)   $ 22,686   $   (199)     $ 41,750
                                      ========   ========   ========    ========    ========    ========   ========      ========

</TABLE>


See accompanying notes to consolidated financial statements.




<PAGE>


                  YONKERS FINANCIAL CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (In thousands)



<TABLE>
<CAPTION>
                                                                                   For the Six Months
                                                                                     Ended March 31,
                                                                                 -----------------------
                                                                                   1999            1998
                                                                                   ----            ----
<S>                                                                              <C>            <C>     
Cash flows from operating activities:
  Net income                                                                     $  1,334       $  1,496
  Adjustments to reconcile net income to net cash provided
     by operating activities:
     Provision for loan losses                                                        150            250
     ESOP and MRP expense                                                             348            416
     Depreciation and amortization expense                                            168            124
     Amortization of deferred fees, discounts and premiums, net                       159             (5)
     Net gain on sales of real estate mortgage loans held for sale                   (246)          (194)
     Net (gain) loss on sales of securities                                           (73)            52
     Other adjustments, net                                                           689           (699)
                                                                                 --------       --------
          Net cash provided by operating activities                                 2,529          1,440
                                                                                 --------       --------
Cash flows from investing activities:
  Purchases of available-for-sale securities                                      (37,098)       (41,051)
  Proceeds from principal payments, maturities and calls of securities:
     Available-for-sale                                                            26,369         14,533
     Held-to-maturity                                                              16,025         15,574
  Proceeds from sales of securities:
     Available-for-sale                                                            17,296          6,111
     Held-to-maturity                                                                 630
  Disbursements for loan originations                                             (69,599)       (66,583)
  Principal collections on loans                                                   20,834          9,716
  Proceeds from sales of loans                                                     29,307         35,192
  Purchases of FHLB stock                                                              --         (1,005)
  Other investing cash flows                                                         (514)          (201)
                                                                                 --------       --------
          Net cash provided by (used in) investing activities                       2,620        (27,084)
                                                                                 --------       --------
Cash flows from financing activities:
  Net increase in deposits                                                         22,044         20,709
  Net (decrease) increase in borrowings with
     original terms of three months or less:
       Securities repurchase agreements                                           (32,178)       (20,818)
       FHLB advances                                                               15,000         (4,500)
 (Repayments of) proceeds from longer-term securities repurchase agreements        (4,600)        34,330
  Common stock repurchased                                                             --            (97)
  Dividends paid                                                                     (402)          (361)
                                                                                 --------       --------
          Net cash (used in) provided by financing activities                        (136)        29,263
                                                                                 --------       --------

Net  increase in cash and cash equivalents                                          5,013          3,619
Cash and cash equivalents at beginning of period                                    4,195          3,593
                                                                                 --------       --------

Cash and cash equivalents at end of period                                       $  9,208       $  7,212
                                                                                 ========       ========

Supplemental information:
  Interest paid                                                                  $  7,202       $  6,104
  Income taxes paid                                                                   361            920
                                                                                 ========       ========
</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>


                  YONKERS FINANCIAL CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

(1)  BASIS OF PRESENTATION

   Yonkers Financial  Corporation (the "Holding Company") was incorporated under
the laws of the State of  Delaware  and on April 18, 1996 became the savings and
loan  holding  company of The  Yonkers  Savings  and Loan  Association,  FA (the
"Association") in connection with the Association's  conversion from a federally
chartered  mutual savings and loan  association to a federally  chartered  stock
savings and loan association (the "Conversion"). Concurrent with the Conversion,
the Holding Company sold 3,570,750  shares of its common stock in a subscription
and community offering at a price of $10 per share, resulting in net proceeds of
$34.6  million.  The assets of the Holding  Company  consist of the stock of the
Association,  certain  short-term  and  other  investments,  and a  loan  to its
Employee Stock  Ownership Plan (the "ESOP").  Collectively,  the Holding Company
and the Association are referred to herein as the "Company".

   On March 31, 1999 the Association established a real estate investment trust,
Yonkers REIT, Inc. (the "REIT"), a wholly-owned subsidiary. On such date, $119.3
million in real estate loans was  transferred  from the Association to the REIT.
The  assets  transferred  to the REIT are  viewed by  regulators  as part of the
Association's assets in consolidation.

   The unaudited  consolidated  financial  statements  included herein have been
prepared in conformity with generally  accepted  accounting  principles.  In the
opinion of management,  the unaudited  consolidated financial statements include
all adjustments,  consisting of normal recurring accruals,  necessary for a fair
presentation of the financial position and results of operations for the interim
periods presented.  The results of operations for the six months ended March 31,
1999 are not  necessarily  indicative of the results of operations  which may be
expected for the fiscal year ending September 30, 1999.

   Certain financial  information and footnote  disclosures normally included in
annual  financial  statements  prepared in conformity  with  generally  accepted
accounting principles have been omitted pursuant to the rules and regulations of
the  Securities  and Exchange  Commission.  The unaudited  interim  consolidated
financial  statements  presented  herein should be read in conjunction  with the
annual consolidated financial statements of the Company as of and for the fiscal
year ended September 30, 1998, included in the Form 10-K.

(2) COMPREHENSIVE INCOME

   During the quarter ended December 31, 1998, the Company adopted  Statement of
Financial  Accounting  Standards  ("SFAS")  No.  130,  "Reporting  Comprehensive
Income," which establishes  standards for reporting and display of comprehensive
income (and its  components)  in financial  statements.  The standard  does not,
however,  specify  when  to  recognize  or how to  measure  items  that  make up


                                       6
<PAGE>




comprehensive  income.  Comprehensive  income  represents net income and certain
amounts reported  directly in stockholders'  equity,  such as the net unrealized
gain or loss on  securities  available  for sale.  While  SFAS No.  130 does not
require a specific  reporting  format, it does require that an enterprise report
an  amount  representing  total  comprehensive  income  for  the  period.  Total
comprehensive  income  (loss)  for the six  months  ended  March  31,  1999  was
($10,000),  consisting  of  $1,334,000  in net  income  less a net  decrease  of
$1,344,000  in  the  after-tax  net   unrealized   gain  on   available-for-sale
securities.  For the six months ended March 31, 1998, total comprehensive income
of $1.5  million  consisted of net income of  $1,496,000  less a net decrease of
$34,000 in the after-tax net unrealized gain on available-for-sale securities.

(3) EARNINGS PER SHARE

   The Company  reports  both basic and diluted  earnings  per share  ("EPS") in
accordance with SFAS No. 128, "Earnings per Share".  Basic EPS excludes dilution
and is computed by  dividing  income  available  to common  stockholders  by the
weighted-average number of common shares outstanding for the period. Diluted EPS
reflects  the  potential  dilution  that  could  occur  if  securities  or other
contracts  to issue  common  stock (such as stock  options)  were  exercised  or
converted  into common  stock or resulted in the  issuance of common  stock that
then shared in the  earnings of the entity.  Diluted EPS is computed by dividing
net income by the weighted  average number of common shares  outstanding for the
period plus  common-equivalent  shares computed using the treasury stock method.
Unallocated  ESOP  shares  that  have  not  been  committed  to be  released  to
participants  are excluded from  outstanding  shares in computing both basic and
diluted EPS.

   The following is a summary of the number of shares  utilized in the Company's
EPS calculations for the three and six months ended March 31, 1999 and 1998. For
purposes of computing  basic EPS, net income  applicable to common stock equaled
net income for both periods presented.


                                               For the Three    For the Six
                                               Months Ended    Months Ended
                                                 March 31,       March 31,
                                               -------------- --------------
                                                1999    1998   1999    1998    
                                               ------  ------ ------  ------
                                                      (In thousands) 

Weighted average common shares outstanding
   for computation of basic EPS(1)             2,455   2,699   2,452   2,695
  Common-equivalent shares due to the
    dilutive effect of stock options
    and MRP awards(2)                             32      86      24      89
                                               -----   -----   -----   -----
Weighted average common shares for
   computation of diluted EPS                  2,488   2,785   2,475   2,784
                                               =====   =====   =====   =====


(1) Excludes  unvested MRP awards and unallocated ESOP shares that have not been
committed to be released.
(2) Computed using the treasury stock method.

                                       7
<PAGE>



PART I. ITEM 2.

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS

FORWARD-LOOKING STATEMENTS

   When  used in this  Form  10-Q or  future  filings  by the  Company  with the
Securities  and Exchange  Commission,  in the Company's  press releases or other
public  or  shareholder  communications,  or in oral  statements  made  with the
approval of an authorized  executive officer,  the words or phrases "will likely
result",  "are expected to",  "will  continue",  "is  anticipated",  "estimate",
"project",   "believe"   or  similar   expressions   are  intended  to  identify
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation  Reform Act of 1995.  The  Company  wishes to caution  readers not to
place undue reliance on any forward-looking  statements,  which speak only as of
the date made, and to advise readers that various  factors,  including  regional
and national  economic  conditions,  changes in levels of market interest rates,
credit risks of lending  activities,  and  competitive  and regulatory  factors,
could affect the Company's financial  performance and could cause actual results
for future periods to differ materially from those anticipated or projected.

   The Company does not undertake, and specifically disclaims any obligation, to
publicly  release  the  result  of  any  revisions  which  may  be  made  to any
forward-looking   statements  to  reflect  the   occurrence  of  anticipated  or
unanticipated events or circumstances after the date of such statements.

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 1999 AND SEPTEMBER 30, 1998

    Total  assets at March 31, 1999  amounted to $382.2  million,  a decrease of
$829,000 from $383.0 million at September 30, 1998. However, loans and deposits,
representing  the  foundation  of  the  Company's  retail  franchise,  increased
significantly during this period.

   Securities at March 31, 1999  decreased  $25.0 million to $143.5 million from
$168.5 million at September 30, 1998, while cash and cash equivalents  increased
$5.0  million to $9.2  million at March 31, 1999 from $4.2  million at September
30, 1998.  Overall,  total loans (loans  receivable  and mortgage loans held for
sale) increased $19.4 to $216.7 million at March 31, 1999 from $197.3 million at
September  30, 1998.  The loan growth during the six months ended March 31, 1999
represents loan originations of $69.6 million,  offset by principal  collections
of $20.8  million,  loans sold of $29.3 million and an increase in the allowance
for loan losses of $151,000.

   Deposit  liabilities  increased  $22.0 million to $253.2 million at March 31,
1999 from $231.2  million at September  30,  1998.  Borrowings  decreased  $21.8
million to $86.0 million at March 31, 1999 from $107.8  million at September 30,
1998.



                                       8
<PAGE>




   Stockholders'  equity  amounted to $41.8  million at March 31, 1999 a $52,000
decrease from September 30, 1998. The decrease is primarily  attributable to net
income  retained after  dividends of $932,000,  a combined  increase of $360,000
relating to the employee stock  ownership  plan and the  management  recognition
plan,  offset by a decrease of $1.3 million in the after-tax net unrealized gain
on  available-for-sale  securities.  The ratio of stockholders'  equity to total
assets  increased to 10.92% at March 31, 1999 from 10.91% at September 30, 1998.
Book  value per share  (computed  based on total  shares  issued  less  treasury
shares) was $15.29 at March 31,  1999, a decrease  from $15.33 at September  30,
1998.  See  "Liquidity  and Capital  Resources"  for  information  regarding the
Association's regulatory capital amounts and ratios.

ANALYSIS OF NET INTEREST INCOME

   The following tables set forth the Company's average balance sheets,  average
yields and costs (on an annualized basis), and certain other information for the
three and six months  ended March 31,  1999 and 1998.  The yields and costs were
derived by dividing  interest income or expense by the average balance of assets
or liabilities,  respectively,  for the periods shown. Substantially all average
balances were computed based on daily  balances.  Interest  income  includes the
effect of deferred  fees,  discounts  and premiums  which are  considered  yield
adjustments.



                                       9
<PAGE>
<TABLE>
<CAPTION>

                                                                For the Quarter Ended March 31,
                                              ----------------------------------------------------------------
                                                           1999                             1998
                                              -------------------------------  -------------------------------
                                               Average               Average    Average              Average
                                               Balance   Interest  Yield/cost   Balance   Interest  Yield/cost
                                              ---------  --------  ----------  ---------  --------  ----------
<S>                                          <C>        <C>       <C>        <C>         <C>        <C> 
Assets                                                                 (Dollars in thousands)
Interest-earning assets:                     
    Loans (1)                                  $206,204  $ 3,785     7.34%     $152,942   $ 3,137      8.20%
    Mortgage-backed securities (2)              115,569    1,827     6.32       112,025     1,937      6.92
    Other securities (2)                         38,519      676     7.02        62,272     1,071      6.88
    Other earning assets                         15,409      184     4.78         7,762       101      5.20
                                               --------  -------               --------   -------
       Total interest-earning assets            375,701  $ 6,472     6.89       335,001   $ 6,246      7.46
                                                         =======                          =======
                                                                                          
Allowance for loan losses                        (1,404)                         (1,168)  
Non-interest-earning assets                       8,538                           7,281   
                                              ---------                        --------   
       Total assets                           $ 382,835                        $341,114              
                                              =========                        ========   
Liabilities and  Stockholders' Equity                                                     
Interest-bearing liabilities:                                                             
    NOW, club and money market accounts       $  55,151  $   313     2.27%     $ 45,969   $   273      2.38%
    Regular savings accounts (3)                 47,942      232     1.94        45,110       265      2.35
    Savings certificate accounts                141,191    1,795     5.09       122,747     1,676      5.46
                                              ---------- -------               --------   -------
       Total interest-bearing deposits          244,284    2,340     3.83       213,826     2,214      4.14
                                                                                          
    Borrowings                                   90,209    1,239     5.49        73,829     1,079      5.85
                                              ---------  -------               --------   -------
       Total interest-bearing liabilities       334,493  $ 3,579     4.28       287,655   $ 3,293      4.58
                                                         =======                          =======
                                                                                          
Non-interest-bearing liabilities                  6,390                           8,525   
                                              ---------                        --------   
       Total liabilities                        340,883                         296,180   
                                                                                          
Stockholders' equity                             41,952                          44,934   
                                              ---------                        --------   
       Total liabilities and stockholders'                                                
          equity                              $ 382,835                        $341,114   
                                              =========                        ========   
Net interest income                                      $ 2,893                          $ 2,953
                                                         =======                          =======
Average interest rate spread (4)                                     2.61%                             2.88%
Net interest margin (5)                                              3.08%                             3.53%
Net interest-earning assets (6)               $ 41,208                         $ 47,346   
                                              ========                         ========   
Ratio of average interest-earning assets                                                  
    to average interest-bearing liabilities                        112.32%                           116.46%
                                                                                          
                                                                                         
</TABLE>


See footnote explanations on the following page.

(1)   Balances are net of deferred loan fees and construction  loans in process,
      and include loans  receivable and loans held for sale.  Non-accrual  loans
      are included in the balances.
(2)   Average balances represent amortized cost.
(3)   Includes mortgage escrow accounts.
(4)   Average interest rate spread  represents the difference  between the yield
      on   average   interest-earning   assets   and   the   cost   of   average
      interest-bearing liabilities.
(5)   Net interest  margin  represents  net interest  income  divided by average
      total interest-earning assets.
(6)   Net interest-earning  assets represents total interest-earning assets less
      total interest-bearing liabilities.


                                       10

<PAGE>

<TABLE>
<CAPTION>

                                                                        For the Six Months Ended March 31,
                                                  ----------------------------------------------------------------------
                                                               1999                                  1998
                                                  ---------------------------------     --------------------------------
                                                  Average                 Average        Average             Average
                                                  Balance     Interest   Yield/Cost     Balance    Interest   Yield/Cost
                                                  -------     --------   ----------     -------    --------   ----------
<S>                                               <C>           <C>            <C>       <C>       <C>            <C>


Assets                                                                  (Dollars in thousands)
Interest-earning assets:
    Loans (1)                                     $ 201,137   $  7,544      7.50%       $ 147,509  $  6,218     8.43%
    Mortgage-backed securities (2)                  116,723      3,691      6.32          105,356     3,681     6.99
    Other securities (2)                             42,231      1,491      7.06           62,869     2,191     6.97
    Other earning assets                             14,647        367      5.01            7,754       210     5.42
                                                  ---------   --------   -------        ---------  --------  -------
       Total interest-earning assets                374,738   $ 13,093      6.99          323,488  $ 12,300     7.60
                                                              ========                             ========
Allowance for loan losses                            (1,366)                               (1,131)     
Non-interest-earning assets                           8,260                                 6,441   
                                                  ---------                             --------- 
       Total assets                               $ 381,632                             $ 328,798
                                                  =========                             =========  
Liabilities and  Stockholders' Equity
Interest-bearing liabilities:
    NOW, club and money market accounts           $  54,116   $    622      2.30%       $  44,391  $    541     2.44%
    Regular savings accounts (3)                     47,176        479      2.03           45,125       542     2.40
    Savings certificate accounts                    137,655      3,620      5.26          121,191     3,317     5.47
                                                  ---------   --------                  ---------  -------- 
       Total interest-bearing deposits              238,947      4,721      3.95          210,707     4,400     4.18

    Borrowings                                       94,055      2,623      5.58           65,593     1,924     5.87
                                                  ---------   --------                  ---------  --------
       Total interest-bearing liabilities           333,002   $  7,344      4.41          276,300  $  6,324     4.58
                                                              ========                             ========

Non-interest-bearing liabilities                      7,637                                 8,042
                                                  ---------                             ---------     
       Total liabilities                            340,639                               284,342

Stockholders' equity                                 40,993                                44,456
                                                  ---------                             ---------
       Total liabilities and stockholders'
         equity                                   $ 381,632                             $ 328,798
                                                  =========                             =========
Net interest income                                           $  5,749                             $  5,976
                                                              ========                             ========
Average interest rate spread (4)                                            2.58%                               3.03%
Net interest margin (5)                                                     3.07%                               3.69%
Net interest-earning assets (6)                   $  41,736                             $  47,188
                                                  =========                             =========
Ratio of average interest-earning assets
 to average
    interest-bearing liabilities                                          112.53%                             117.08%



(1)  Balances are net of deferred loan fees and  construction  loans in process,
     and include loans receivable and loans held for sale. Non-accrual loans are
     included in the balances.
(2)  Average balances represent amortized cost.
(3)  Includes mortgage escrow accounts.
(4)  Average interest rate spread represents the difference between the yield on
     average  interest-earning  assets and the cost of average  interest-bearing
     liabilities.
(5)  Net interest margin represents net interest income divided by average total
     interest-earning  assets.
(6)  Net interest-earning  assets represents total interest-earning  assets less
     total interest-bearing liabilities.


</TABLE>


                                       11

<PAGE>
<TABLE>
<CAPTION>




   The following  table  presents the extent to which changes in interest  rates
and  changes  in the  volume of  interest-earning  assets  and  interest-bearing
liabilities  affected the Company's  interest income and interest expense during
the three and six months ended March 31, 1999 compared to the same period in the
prior year. Information is provided in each category with respect to (i) changes
attributable to changes in volume (changes in volume  multiplied by prior rate),
(ii) changes  attributable  to changes in rate  (changes in rate  multiplied  by
prior  volume),  and (iii)  the net  change.  The  changes  attributable  to the
combined  impact of volume and rate have been allocated  proportionately  to the
changes due to volume and the changes due to rate.

                                       For the Quarter Ended March 31, For the Six Months Ended March 31,
                                           1999 Compared to 1998              1999 Compared to 1998
                                       ------------------------------  ---------------------------------
                                       Increase (Decrease)             Increase (Decrease)
                                             Due to                         Due to     
                                       -------------------     Net     --------------------      Net
                                        Volume      Rate      Change     Volume      Rate      Change
                                       --------   --------   --------  ---------   --------   ---------
<S>                                     <C>        <C>        <C>        <C>        <C>        <C>    
                                                                (In thousands)
Interest-earning assets:
  Loans                                 $ 1,003    $  (355)   $   648    $ 2,070    $  (744)   $ 1,326
  Mortgage-backed securities                 60       (170)      (110)       379       (369)        10
  Other securities                         (416)        21       (395)      (728)        28       (700)
  Other earning assets                       92         (9)        83        174        (17)       157
                                        -------    -------    -------    -------    -------    -------
             Total                          739       (513)       226      1,895     (1,102)       793
                                        -------    -------    -------    -------    -------    -------
Interest-bearing liabilities:
  NOW, club and money market accounts        53        (13)        40        113        (32)        81
  Regular savings accounts                   16        (49)       (33)        24        (87)       (63)
  Savings certificate accounts              239       (120)       119        435       (132)       303
  Borrowings                                229        (69)       160        798        (99)       699
                                        -------    -------    -------    -------
                                                                                    -------    -------
             Total                          537       (251)       286      1,370       (350)     1,020
                                        -------    -------    -------    -------    -------    -------

Net change in net interest income       $   202    $  (262)   $   (60)   $   525    $  (752)   $  (227)
                                        =======    =======    =======    =======    =======    =======
</TABLE>


COMPARISON  OF  OPERATING  RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND
1998

   GENERAL.  Net income for the  second  fiscal  quarter  ended  March 31,  1999
amounted to $667,000,  or $0.27 diluted  earnings per common share,  compared to
net income of  $688,000,  or $0.25  diluted  earnings  per common  share for the
second fiscal quarter ended March 31, 1998.  The $21,000  decrease in net income
was  attributable  to a $60,000  decrease in net interest  income and a $304,000
increase in non-interest  expense,  partially  offset by a $278,000  increase in
non-interest income and a $65,000 decrease in income tax expense.

   NET INTEREST INCOME. Net interest income for the three months ended March 31,
1999 was $2.9  million,  a decrease  of $60,000  from $3.0  million for the same
period  in  the  prior   year.   The   decrease   reflects   a  decline  in  net
interest-earning    assets   (total    interest-earning    assets   less   total
interest-bearing  liabilities)  coupled  with a decline in the average  interest
rate  spread to 2.61% for the  quarter  ended  March 31, 1999 from 2.88% for the
same  quarter  last  year.  The  decline in the  average  interest  rate  spread


                                       12
<PAGE>




primarily reflects lower asset yields from the origination of new mortgage loans
(including  refinancings)  in the current lower interest rate  environment.  The
Company's  net  interest  margin  decreased  to 3.08% for the three months ended
March 31, 1999, from 3.53% a year earlier.

   INTEREST  INCOME.  Interest and dividend  income totaled $6.5 million for the
three  months  ended March 31,  1999,  an increase of $226,000  compared to $6.2
million for the three months ended March 31, 1998.  This  increase  reflects the
effect of a $40.7  million  increase in total  average  interest-earning  assets
partially  offset by a 57 basis  point  decrease  in the  average  yield on such
assets to 6.89% for the three  months  ended  March 31,  1999 from 7.46% for the
same period in the prior year.

   Interest income on loans increased  $648,000 for the three months ended March
31, 1999 compared to the same period in the prior year, reflecting the effect of
a $53.3 million  increase in the average balance  partially offset by a 86 basis
point  decrease in the average  yield.  The  increase in the average  balance of
loans  was  primarily   attributable  to  an  increase  in  one-to-four   family
residential  mortgage  loans.  The lower average yield reflects the repricing of
adjustable  rate mortgage loans and the  origination of new loans in the current
low interest rate environment.

   On a combined  basis,  interest and dividend  income on  mortgage-backed  and
other securities  decreased  $505,000 to $2.5 million for the three months ended
March 31, 1999 from $3.0  million  for the three  months  ended March 31,  1998.
Interest on mortgage-backed securities decreased by $110,000,  attributable to a
60 basis point decrease in the average yield, partially offset by the effects of
a $3.5 million  increase in the average  balance.  Interest on other  securities
declined by $395,000,  primarily attributable to a $23.8 million decrease in the
average balance.

   Interest and  dividend  income on other  earning  assets  increased  $83,000,
primarily  attributable  to a  $7.6  million  increase  in the  average  balance
partially offset by a 42 basis point decrease in the average yield.

   INTEREST EXPENSE.  Interest expense totaled $3.6 million for the three months
ended March 31, 1999,  an increase of $286,000  from the prior  year's  quarter.
Interest expense on deposits  increased  $126,000 compared to the same period in
the prior  year,  reflecting  the  effect of an $30.5  million  increase  in the
average  balance  partially  offset by a 31 basis point  decrease in the average
rate on interest-bearing  deposits to 3.83% for the three months ended March 31,
1999 from 4.14% for the three  months  ended  March 31,  1998.  The  increase in
average  interest-bearing  deposits  consisted  of a $18.5  million  increase in
average savings certificate  accounts (to $141.2 million from $122.7 million), a
$9.2 million  increase in average NOW, club and money market  accounts (to $55.2
million  from $46.0  million)  and a $2.8  million  increase in average  regular
savings accounts (to $47.9 million from $45.1 million).

   Interest  expense on  borrowings  increased  $160,000 to $1.2 million for the
three months ended March 31, 1999 from $1.1 for the three months ended March 31,
1998.  Total  borrowings  averaged $90.2 million  (borrowings  under  securities
repurchase  agreements  represented  $79.3  million)  for the three months ended


                                       13
<PAGE>



March 31, 1999 at an average rate of 5.49% compared to $73.8 million (borrowings
under securities  repurchase  agreements  represented  $70.8 million) and 5.85%,
respectively,  for the prior-year's  quarter.  The majority of this increase was
attributable to interest on borrowings under securities  repurchase  agreements.
See "Liquidity and Capital  Resources" for a further discussion of the Company's
securities repurchase agreements.

   PROVISION FOR LOAN LOSSES. The provision in each period reflects management's
evaluation of the adequacy of the allowance for loan losses.  Factors considered
include the volume and type of lending  conducted,  the Company's  previous loan
loss  experience,  the known and inherent risks in the loan  portfolio,  adverse
situations that may affect the borrowers'  ability to repay, the estimated value
of any underlying collateral, and current economic conditions. The provision for
loan losses was $75,000 for both of the quarters  ended March 31, 1999 and 1998.
Non-performing loans totaled $777,000 at March 31, 1999, compared to $753,000 at
September 30, 1998 and $1.1 million at March 31, 1998. See "Asset Quality" for a
further discussion of the Company's non-performing assets and allowance for loan
losses.

   NON-INTEREST INCOME. Non-interest income for the three months ended March 31,
1999 increased $278,000 to $526,000,  from $248,000 for the comparable period in
1998.  The  increase is primarily  attributable  to increases in the net gain on
sales  of loans  held for  sale,  the net  gain on  sales of  securities,  other
non-interest  income,  and service  charges and fee income.  Mortgage loans sold
during the three months ended March 31, 1999 amounted to $9.2 million  resulting
in net gains of $109,000,  as compared to loan sales of $12.3 million during the
three  months ended March 31, 1998 which  resulted in net gains of $58,000.  Net
gain on sales of securities amounted to $70,000 for the three months ended March
31, 1999 as compared  to losses of $37,000 for the March 31, 1998  quarter.  The
increase in other  non-interest  income primarily reflects a $72,000 gain on the
sale of loan servicing  rights in the current  quarter.  The increase in service
charges and fee income primarily reflects increases in transaction volume.

   NON-INTEREST EXPENSE. Non-interest expense increased $304,000 to $2.3 million
for the three  months  ended March 31,  1999,  compared to $2.0  million for the
three months ended March 31, 1998.  Compensation and benefits expense  increased
$140,000 from the prior-year  quarter  primarily due to increased costs relating
to  additional  staffing in the in-store  branch  opened in October 1998 and the
loan  department,  coupled with  performance-based  increases  for certain staff
members.  The increase of $100,000 in occupancy and equipment  expense primarily
reflects  increased costs associated with the  establishment of a lending center
in  November  1998 and an  in-store  branch in October  1998.  These new banking
locations coupled with increased  transaction  volumes attributed to the $41,000
increase in data processing service fees. Included in other non-interest expense
for the three months ended March 31, 1999 were  expenses of $70,000  relating to
the establishment of the REIT.

   INCOME TAX  EXPENSE.  Income tax expense was  approximately  $394,000 for the
three months ended March 31, 1999 and $459,000 for the  comparable  1998 period,


                                       14
<PAGE>



reflecting  lower  pre-tax  income and  effective  tax rates of 37.1% and 40.0%,
respectively.  The decrease in the  effective  tax rate  reflects the  ancillary
benefits from the  aforementioned  REIT. Under current law, all income earned by
the REIT is distributed to the Association in the form of a dividend and has the
effect of reducing the Company's New York State income tax expense.

COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED MARCH 31, 1999 AND 1998

   GENERAL.  Net income for the six months ended March 31, 1999 was $1.3 million
or diluted  earnings per common  share of $0.54,  compared to net income of $1.5
million or diluted  earnings  per common share of $0.54 for the six months ended
March 31,  1998.  The  $162,000  decrease  in net income was  attributable  to a
$227,000 decrease in net interest income and a $536,000 increase in non-interest
expense,  partially  offset by a $331,000  increase in  non-interest  income,  a
$170,000 decrease in income tax expense and a $100,000 decrease in the provision
for loan losses.

   NET INTEREST  INCOME.  Net interest income for the six months ended March 31,
1999 was $5.7  million,  as compared to $6.0  million for the same period in the
prior year. The decrease reflects a $5.5 million decline in net interest-earning
assets (total interest-earning assets less total interest-bearing  liabilities),
and a decline in the  average  interest  rate spread to 2.58% for the six months
ended March 31,  1999 from 3.03% for the same six months last year.  The decline
in net interest-earning  assets is primarily attributable to the use of funds to
repurchase the Company's  common stock. The decline in the average interest rate
spread  primarily  reflects  lower  asset  yields  from the  origination  of new
mortgage  loans  (including  refinancings)  in the current  lower  interest rate
environment.  The Company's net interest  margin  decreased to 3.07% for the six
months ended March 31, 1999, from 3.69% a year earlier.

   INTEREST  INCOME.  Interest and dividend income totaled $13.1 million for the
six months  ended March 31,  1999,  an  increase  of $793,000  compared to $12.3
million for the six months  ended March 31,  1998.  This  increase  reflects the
effect of a $51.3  million  increase in total  average  interest-earning  assets
partially  offset by a 61 basis  point  decrease  in the  average  yield on such
assets to 6.99% for the six months  ended March 31, 1999 from 7.60% for the same
period in the prior year.

   Interest  income on loans  increased  $1.3  million for the six months  ended
March 31, 1999  compared to the same  period in the prior year,  reflecting  the
effect of a $53.6 million increase in the average balance  partially offset by a
93 basis  point  decrease  in the  average  yield.  The  increase in the average
balance of loans was primarily attributable to an increase in one-to-four family
residential  mortgage  loans.  The lower average yield reflects the repricing of
adjustable  rate mortgage loans and the  origination of new loans in the current
low interest rate environment.

   On a combined  basis,  interest and dividend  income on  mortgage-backed  and
other  securities  decreased  $690,000 to $5.2  million for the six months ended
March 31,  1999 from $5.9  million  for the six  months  ended  March 31,  1998.


                                       15
<PAGE>



Interest on mortgage-backed securities increased by $10,000, attributable to the
effects of a $11.4 million increase in the average balance  substantially offset
by a 67 basis  point  decrease  in the average  yield,  while  interest on other
securities  declined by  $700,000,  primarily  attributable  to a $20.6  million
decrease in the average balance.

   Interest and dividend  income on other  earning  assets  increased  $157,000,
primarily  attributable  to a  $6.9  million  increase  in the  average  balance
partially offset by a 41 basis point decrease in the average yield.

   INTEREST  EXPENSE.  Interest  expense totaled $7.3 million for the six months
ended March 31,  1999,  an increase of $1.0  million  from the prior  year's six
months.  Interest expense on deposits  increased  $321,000  compared to the same
period in the prior year,  reflecting the effect of an $28.2 million increase in
the average balance partially offset by a 23 basis point decrease in the average
rate on  interest-bearing  deposits to 3.95% for the six months  ended March 31,
1999 from 4.18% for the six months ended March 31, 1998. The increase in average
interest-bearing  deposits  consisted  of a $16.5  million  increase  in average
savings  certificate  accounts (to $137.7 million from $121.2  million),  a $9.7
million  increase  in average  NOW,  club and money  market  accounts  (to $54.1
million  from $44.4  million)  and a $2.0  million  increase in average  regular
savings accounts (to $47.1 million from $45.1 million).

   Interest expense on borrowings increased $699,000 to $2.6 million for the six
months ended March 31, 1999 from $1.9 million for the six months ended March 31,
1998. Total borrowings averaged $94.1 million for the six months ended March 31,
1999  at an  average  rate  of  5.58%  compared  to  $65.6  million  and  5.87%,
respectively,  for the prior-year's  period.  Substantially all of this increase
was  attributable  to  interest  on  borrowings   under  securities   repurchase
agreements.  See "Liquidity and Capital  Resources" for a further  discussion of
the Company's securities repurchase agreements.

   PROVISION FOR LOAN LOSSES. The provision in each period reflects management's
evaluation of the adequacy of the allowance for loan losses.  Factors considered
include the volume and type of lending  conducted,  the Company's  previous loan
loss  experience,  the known and inherent risks in the loan  portfolio,  adverse
situations that may affect the borrowers'  ability to repay, the estimated value
of any underlying collateral, and current economic conditions. The provision for
loan losses was  $150,000  and  $250,000 for the six months ended March 31, 1999
and 1998,  respectively.  The higher provision in the six months ended March 31,
1998 reflected the impact of higher net charge-offs  which were $100,000 for the
period,  compared to net recoveries of $1,000 for the six months ended March 31,
1999.   See  "Asset   Quality"  for  a  further   discussion  of  the  Company's
non-performing assets and allowance for loan losses.

   NON-INTEREST  INCOME.  Non-interest income for the six months ended March 31,
1999 increased $331,000,  to $936,000 from $605,000 for the comparable period in
1998.  The  increase is primarily  attributable  to increases in the net gain on
sales  of loans  held for  sale,  the net  gain on  sales of  securities,  other
non-interest  income,  and service  charges and fee income.  Mortgage loans sold


                                       16
<PAGE>



during the six months ended March 31, 1999 amounted to $29.3  million  resulting
in net gains of $246,000,  as compared to loan sales of $35.2 million during the
six months ended March 31, 1998,  which  resulted in net gains of $194,000.  Net
gain on sales of  securities  amounted to $73,000 for the six months ended March
31, 1999  reflecting  sales of $17.2  million in  available-for-sale  securities
during the  period,  while  losses of  $52,000  were  incurred  on sales of $6.2
million in the prior year's period.  The increase in other  non-interest  income
primarily  reflects a $72,000 gain on the sale of loan  servicing  rights in the
1999 period.  The increase in service charges and fee income primarily  reflects
increases in transaction volume.

   NON-INTEREST EXPENSE. Non-interest expense increased $536,000 to $4.3 million
for the six months  ended March 31,  1999,  compared to $3.8 million for the six
months  ended  March 31,  1998.  Compensation  and  benefits  expense  increased
$304,000  from the  prior-year  six  months  primarily  due to  increased  costs
relating to  additional  staffing in the loan  department  and the two  in-store
branches,  coupled with  performance-based  increases for certain staff members.
The increase of $116,000 in occupancy and equipment expense  primarily  reflects
increased  costs  associated  with the  establishment  of an in-store  branch in
December 1997 and another in October 1998 and a lending center in November 1998.
Included in other  non-interest  expense for the six months ended March 31, 1999
were expenses of $70,000 relating to the establishment of the REIT.

   INCOME TAX  EXPENSE.  Income tax expense  for the six months  ended March 31,
1999 was approximately $857,000 as compared to $1.0 million for the 1998 period,
reflecting  lower  pre-tax  income and  effective  tax rates of 39.1% and 40.7%,
respectively.  The decrease in the  effective  tax rate  reflects the  ancillary
benefits from the aforementioned REIT.

ASSET QUALITY

   Non-performing  loans totaled $777,000 at March 31, 1999, up from $753,000 at
September  30, 1998 and down from $1.1 million at March 31,  1998.  The ratio of
non-performing  loans to total  loans  receivable  was 0.37% at March 31,  1999,
compared  to 0.41% at  September  30,  1998 and  0.71% at March  31,  1998.  The
allowance for loan losses was $1.5 million or 0.69% of total loans receivable at
March 31, 1999,  compared to $1.3 million or 0.70% of total loans  receivable at
September 30, 1998 and $1.2 million or 0.82% at March 31, 1998. The ratio of the
allowance for loan losses to non-performing loans was 187.00% at March 31, 1999,
compared to 172.91% at September 30, 1998 and 115.52% at March 31, 1998.

   The following table sets forth certain asset quality ratios and other data at
the dates indicated:


                                               March 31, September 30, March 31,
                                                 1999        1998        1998
                                              ----------  ------------ ---------
                                                   (Dollars in thousands)

Non-accrual loans past due ninety
  days or more:
  Real estate mortgage loans:
       One- to four-family .................   $  552    $  515      $  538
       Commercial ..........................      198       203         207
       Land ................................       --        --         201
       Construction ........................       --        --          88
  Consumer loans ...........................       27        35          42
                                               ------    ------      ------
           Total ...........................      777       753       1,076
Real estate owned, net .....................      183       305         349
                                               ------    ------      ------
Total non-performing assets ................   $  960    $1,058      $1,425
                                               ======    ======      ======
                                                                     
Allowance for loan losses ..................   $1,453    $1,302      $1,243
                                               ======    ======      ======
Ratios:                                                              
  Non-performing loans to total                                      
    loans receivable .......................     0.37%     0.41%       0.71%
  Non-performing assets to total assets ....     0.25      0.28        0.41
  Allowance for loan losses to:                                      
      Non-performing loans .................   187.00    172.91      115.52
      Total loans receivable ...............     0.69      0.70        0.82
                                                                   


LIQUIDITY AND CAPITAL RESOURCES

   The Company's primary sources of funds are deposits and borrowings; principal
and interest payments on loans and securities;  and proceeds from sales of loans
and securities.  While maturities and scheduled payments on loans and securities
provide an  indication  of the timing of the receipt of funds,  other sources of
funds such as loan  prepayments and deposit inflows are less  predictable due to
the effects of changes in interest rates, economic conditions and competition.

   The main sources of liquidity  for the Holding  Company are net proceeds from
the sale of stock and dividends received from the Association,  if any. The main
cash flows are payments of  dividends to  shareholders  and  repurchases  of the
Holding Company's common stock.

   The  Association  is required to maintain an average  daily  balance of total
liquid  assets  as a  percentage  of  net  withdrawable  deposit  accounts  plus
short-term  borrowings,  as defined by the  regulations  of the Office of Thrift


                                       18
<PAGE>




Supervision.  The minimum  required  liquidity ratio at March 31, 1999 was 4.0%,
and the Company's actual liquidity ratio was 11.0%.

    The primary investing  activities of the Company are the origination of real
estate mortgage and other loans, and the purchase of  mortgage-backed  and other
securities.  At March 31, 1999,  the Company had  outstanding  loan  origination
commitments  of $18.6  million,  unadvanced  home equity lines of credit of $2.3
million and undisbursed  construction loans in process of $609,000.  The Company
anticipates  that it will have  sufficient  funds  available to meet its current
loan origination and other  commitments.  At March 31, 1999, the Company had the
ability to obtain  additional  FHLB  advances of  approximately  $75.4  million.
Certificates  of deposit  scheduled to mature in one year or less from March 31,
1999 totaled $103.8 million.  Based on the Company's most recent  experience and
pricing  strategy,  management  believes  that a  significant  portion  of  such
deposits will remain with the Company.

   The  Company's  borrowings  at March 31, 1999  consisted of $71.0  million in
borrowings  under  securities  repurchase  agreements and FHLB advances of $15.0
million. FHLB advances at March 31, 1999 had a weighted average interest rate of
4.36% and a term to maturity of 9.6 years with a call date in 1.6 years.  In the
securities repurchase agreements, the Company borrows funds through the transfer
of debt securities to the FHLB of New York, as  counterparty,  and  concurrently
agrees to repurchase  the  identical  securities at a fixed price on a specified
date.  The  Company   accounts  for  these   agreements  as  secured   financing
transactions   since  it  maintains   effective  control  over  the  transferred
securities. Accordingly, the transaction proceeds are recorded as borrowings and
the  underlying  securities  continue  to  be  carried  in  the  Company's  debt
securities portfolio. Repurchase agreements are collateralized by the securities
sold and, in certain  cases,  by additional  margin  securities.  During the six
months  ended March 31,  1999,  the average  borrowings  under these  agreements
amounted to $82.5  million and the maximum  month-end  balance  outstanding  was
$98.6 million.

   Additional  information concerning outstanding repurchase agreements with the
FHLB of New York as of March 31, 1999 is summarized as follows:

                                       19
<PAGE>


<TABLE>
<CAPTION>


                                    Repurchase Borrowings
-------------------------------------------------------------------------------------------------------
                                                                       Accrued          Weighted         Fair Value
                                                                       Interest          Average         of Collateral
Remaining Term to Final Maturity(1)                 Amount           Payable (2)          Rate           Securities (3)
-----------------------------------               -----------        -----------        --------         --------------
<S>                                               <C>                <C>                 <C>              <C>
                                                                   (Dollars in thousands)

After 30 days but within one year                 $   5,000           $    186            5.74%                5,639
After one but within three years                     20,600                 96            5.91                24,323
After three but within five years                    15,000                 97            5.65                12,693
After five years                                     30,412                198            5.47                29,685
                                                  ---------           --------                              --------

  Total                                           $  71,012           $    577            5.66%             $ 72,340
                                                  =========           ========                              ========


</TABLE>

(1) The weighted average  remaining term to final maturity was approximately 5.0
years at March 31, 1999. Certain securities  repurchase  agreements are callable
by the FHLB of New  York,  prior to the  maturity  date.  The  weighted  average
remaining  term  to  maturity,   giving  effect  to  earlier  call  dates,   was
approximately 2.1 years at March 31, 1999.
(2) Included in other liabilities in the consolidated balance sheet.
(3) Represents the fair value of the mortgage-backed  securities ($57.1 million)
and  other  debt  securities  ($15.2  million)  which  were  transferred  to the
counterparty,   including  accrued  interest   receivable  of  $583,000.   These
securities  consist  of   available-for-sale   securities  and  held-to-maturity
securities with fair values of $63.3 million and $9.0 million, respectively.

   At March 31, 1999, the Company's "amount at risk" under securities repurchase
agreements was approximately  $751,000. This amount represents the excess of (i)
the carrying amount, or market value if higher, of the securities transferred to
the FHLB of New York plus accrued  interest  receivable  over (ii) the amount of
the repurchase liability plus accrued interest payable.

   At March 31, 1999, the  Association  exceeded all of its  regulatory  capital
requirements  with a tangible  capital level of 9.66% of total adjusted  assets,
which is above  the  required  level of  1.5%;  core  capital  of 9.66% of total
adjusted assets, which is above the required level of 3.0%; and total risk-based
capital of 25.71%,  which is above the required level of 8.0%.  These regulatory
capital  requirements,  which are  applicable  to the  Association  only, do not
consider  additional  capital  held at the Holding  Company  level,  and require
certain  adjustments to  stockholder's  equity to arrive at the various  capital
amounts.

YEAR 2000 CONSIDERATIONS

   The Company,  like all companies that utilize computer technology,  is facing
significant  challenges  associated with ensuring that its computer systems will
accurately  process  time-sensitive  data  beyond  the year 1999 (the "Year 2000
Issue").  Many existing computer programs and systems were originally programmed
with six digit dates that provided only two digits to identify the calendar year
in the date field, without considering the upcoming change in the century.  With
the impending  millennium,  these  programs and computers will recognize "00" as
the year 1900 rather than the year 2000.



                                       20
<PAGE>



   Like most financial service providers,  the Company and its operations may be
significantly  affected  by the Year 2000 Issue due to the  nature of  financial
information.  This includes  software,  hardware and  equipment  both within and
outside the Company's direct control and with whom the Company electronically or
operationally  interfaces (e.g.  third-party  vendors providing data processing,
information  system  management,  maintenance  of computer  systems,  and credit
bureau information).  If computer systems are not adequately changed to identify
the year  2000,  many  computer  applications  could  fail or  create  erroneous
results. As a result, calculations that rely on the date field information (such
as interest,  payment or due dates and other operating functions) would generate
results which could be significantly misstated, and the Company could experience
a  temporary  inability  to process  transactions  and engage in similar  normal
business  activities.  In  addition,  under  certain  circumstances,  failure to
adequately  address the Year 2000 Issue could adversely  affect the viability of
the  Company's  suppliers  and  creditors,   and  the  creditworthiness  of  its
borrowers.  Thus, if not adequately addressed,  the Year 2000 Issue could have a
significant adverse impact on the Company's  products,  services and competitive
condition.

       The Company's  primary  federal  regulator  agency,  the Office of Thrift
Supervision ("OTS"), has published  substantive guidance on the Year 2000 Issue,
alone and in conjunction  with other federal  regulatory  agencies.  The OTS has
also included Year 2000 compliance as a substantive  area of examination  during
special and regularly scheduled  examinations.  These publications also included
requirements for the creation and  implementation of a Year 2000 compliance plan
as well as setting forth certain  target dates.  Should a financial  institution
not become  Year 2000  compliant,  it could  then be  subject to  administrative
remedies similar to those imposed on financial  institutions otherwise found not
to be operating in a safe and sound manner.

      The Company has  established  and is  implementing a Year 2000 Action Plan
(the  "Plan")  to  address  the Year  2000  Issue.  The Plan  includes  the five
components as recommended by the OTS, which address issues involving  awareness,
assessment, renovation, validation and implementation. The Company has completed
the awareness and assessment phases of the Plan. Under the regulatory guidelines
previously  mentioned,  testing of core mission  critical  internal systems must
have been substantively  completed by December 31, 1998 and testing with service
providers  must  have  been  substantively  completed  by March  31,  1999.  All
renovations  must be  substantially  complete,  and testing of mission  critical
systems must be completed,  by June 30, 1999. As of March 31, 1999,  the Company
substantively  completed  testing  its  internal  mission  critical  systems and
testing with its primary  service  provider,  which  provides  almost all of the
Company's  data  processing.  The  Company  expects to meet the other  deadlines
previously noted.

   As  part  of the  Plan,  the  Company  is in  communication  with  all of its
significant  suppliers  and vendors to determine the extent to which the Company
is vulnerable to those third parties'  failure to remediate  their own Year 2000
Issue.  The  Company  presently  believes  that with  modifications  to existing
software and conversions to new software,  the Year 2000 Issue will be mitigated
without  causing a material  adverse  impact on the  operations  of the Company.


                                       21
<PAGE>



However,  if  such  modifications  and  conversions  are  not  made,  or are not
completed timely,  the Year 2000 Issue could have an impact on the operations of
the Company.

   The Company is also  preparing a Year 2000  business  resumption  contingency
plan to  document  pre-determined  actions  to help the  Company  resume  normal
operations in the event of failure of any mission-critical  service and product.
Uncontrollable  events,  such as loss of the  global  power  grid and  telephone
service  failures,  will affect all companies,  government and customers;  these
global  events  cannot  be  remedied  by  anyone  other  than  the   appropriate
responsible  party.  The Company has  reviewed  its  customer  base to determine
whether they pose  significant  Year 2000 risks;  the customer base is primarily
composed of  individuals  who  utilize  the  Company's  services  for  personal,
household  or  consumer  uses  and  thus,  individually,   not  likely  to  pose
significant  Year 2000 risks  directly.  The Company also  reviewed its borrower
base and determined that it is primarily  secured by residential and multifamily
residences,  which management believes does not carry a high Year 2000 risk. The
Company is assuring the availability of cash to meet potential  depositor demand
due to concerns  about the  availability  of funds as we approach the Year 2000.
Contingency plans are being developed for identified mission-critical systems in
anticipation of the possibility of unplanned  system  difficulties or failure of
third parties to successfully  prepare for the century date change.  The Company
has made substantial progress in its contingency planning process and expects to
have it completed by June 30, 1999.

   At this  time,  the  Company  does  not  expect  the  reasonably  foreseeable
consequences  of the Year 2000  Issue to have  material  adverse  effects on the
Company's  business,  operations or financial  condition.  However,  despite its
efforts,  the  Company  cannot  be  certain  that it will  not  suffer  business
interruptions,  either due to its own Year 2000 Issue or those of its  customers
or vendors or third  parties  whose Year 2000  problems may make it difficult or
impossible to fulfill their  commitments to the Company.  In addition,  the Year
2000 Issue has many elements and potential  consequences,  some of which may not
be reasonably  foreseeable,  and there can be no assurances  that every material
Year 2000 issue will be identified and addressed or that unforeseen consequences
will not arise and possibly have a material adverse effect on the Company.

   Monitoring and managing the Year 2000 Issue will result in additional  direct
and indirect  costs to the Company.  Direct costs include  potential  charges by
third-party software vendors for product enhancements, costs involved in testing
software  products  for  Year  2000  compliance,  and any  resulting  costs  for
developing and implementing  contingency  plans for critical  software  products
which are not  enhanced.  Indirect  costs will  principally  consist of the time
devoted by existing  employees in monitoring  software vendor progress,  testing
enhanced  software  products and implementing any necessary  contingency  plans.
Based on the  current  status  of the  Company's  Year 2000  efforts,  the costs
associated  with identified Year 2000 issues are not expected to have a material
effect on the results of operations or financial condition of the Company. Costs
incurred  through  March  31,  1999  were  approximately   $135,000,   of  which
approximately  one-quarter was recognized as incurred with the balance amortized


                                       22
<PAGE>



over a five-year  period.  Management  currently  estimates that remaining costs
will range  between  $5,000 and  $40,000,  most of which will be  recognized  in
calendar year 1999.


PART I. ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Market risk is the potential loss from adverse changes in market prices and
rates.  The  Company's  market risk arises  primarily  from  interest  rate risk
inherent in its lending,  investing and deposit taking activities. The Company's
real estate loan portfolio,  concentrated  primarily in Westchester  County, New
York,  and  portions of Putnam,  Rockland and Dutchess  Counties,  New York,  is
subject to risks associated with the local economy.

     There have been no material  changes in the  Company's  interest  rate risk
position since  September 30, 1998.  Other types of market risk, such as foreign
exchange rate risk and  commodity  price risk, do not arise in the normal course
of the Company's business activities.

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

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

ITEM 2.  CHANGES IN SECURITIES

   None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

   None



                                       23
<PAGE>



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

 At the Company's  annual meeting of stockholders  held on January 27, 1999, the
following  matters  were  voted  upon,  with the  results  of the voting on such
matters indicated:

     1.  Election  of the  following  persons  to  serve  a  three-year  term as
directors of the Company:

      NOMINEE                            FOR               WITHHELD
      -------                            ---               --------
      Richard F. Komosinski           2,519,424            18,957
      Michael J. Martin               2,519,924            18,457

      Broker Non-Vote:      None

     2. The approval of certain amendments to The Yonkers Financial  Corporation
1996 Stock Option and Incentive Plan:

      For:                 2,425,248
      Against:                84,647
      Abstained:              19,624
      Broker Non-Vote:         8,862

      3. The approval of certain amendments to The Yonkers Financial Corporation
1996 Management Recognition Plan:

      For:                 2,409,557
      Against:                96,647
      Abstained:              23,374
      Broker Non-Vote:         8,803

      4. Ratification of the appointment of KPMG LLP as the independent auditors
of the Company for the fiscal year ending September 30, 1999:

      For:                 2,523,576
      Against:                11,604
      Abstained:               3,200
      Broker Non-Vote:             1

ITEM 5.  OTHER INFORMATION

    None



                                       24
<PAGE>




ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
     (a)  Exhibits

 Exhibit No.                                                Name
 -----------                                                ----

   27                                             Financial Data Schedule

   (b)  Reports on Form 8-K

    None





                                       25
<PAGE>



SIGNATURES

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


                                              YONKERS FINANCIAL CORPORATION
                                              -----------------------------
                                              (Registrant)


Date:  May 14, 1999                           /s/  Richard F. Komosinski
                                                   --------------------------
                                                   Richard F. Komosinski,
                                                   President and Chief
                                                       Executive Officer
                                                   (Principal Executive Officer)


Date:  May 14, 1999                           /s/  Joseph D. Roberto
                                                   --------------------------
                                                   Joseph D. Roberto
                                                   Vice President, Treasurer and
                                                       Chief Financial Officer
                                                   (Principal Financial Officer)






                                       26