----

----

**UNITED STATESSECURITIES AND EXCHANGE COMMISSION****Washington, DC 20549**

**FORM 10-Q**

**(MarkOne)**
| ý | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES  EXCHANGE ACT OF 1934** |
|--------|-----------------------------------------------------------------------------------------------|

 
|   | **For the quarterly period ended June  30, 2001** |
|--------|---------------------------------------------------|

** **

## **OR**

| o | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES  EXCHANGE ACT OF 1934** |
|---|------------------------------------------------------------------------------------------------|

 

**For thetransition period from   _______   to  ________**

**CommissionFile Number 0-27716**

**YONKERS FINANCIAL CORPORATION**

(Exact name of registrantas specified in its charter)

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

 

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

 

Registrant’s telephonenumber, including area code:  **(914) 965-2500**

Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15 (d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days. Yes ý No o

Indicate the number of shares outstanding of each of the issuer’sclasses of common stock, as of the latest practicable date.

| Classes of Common Stock | Number of Shares  Outstanding, June 30, 2001 |
|-------------------------|----------------------------------------------|
|                         |                                              |
| $0.01 Par Value         | 2,228,739                                    |

----

----

**YONKERS FINANCIAL CORPORATIONFORM 10-QQUARTERLY PERIOD ENDED JUNE 30, 2001**

** **

**PART I.  FINANCIAL INFORMATION**

| Item 1. | Financial Statements (Unaudited)                                                                                      |
|---------|-----------------------------------------------------------------------------------------------------------------------|
|    | Consolidated Balance Sheets  at June 30, 2001 and September 30, 2000                                                  |
|    | Consolidated  Statements of Income for the Three and Nine Months Ended June 30, 2001 and  2000                        |
|    | Consolidated  Statement of Changes in Stockholders’ Equity   for the Nine Months Ended June   30, 2001 |
|    | Consolidated  Statements of Cash Flows for the Nine Months   Ended June 30, 2001 and 2000                        |
|    | Notes  to Consolidated Financial Statements.                                                                          |
| Item 2. | Management’s Discussion and  Analysis of Financial Condition and Results of Operations                           |
| Item 3. | Quantitative and Qualitative  Disclosures About Market Risk                                                           |

 

**PART II.  OTHER INFORMATION**

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

 

 

**YONKERS FINANCIAL CORPORATION AND SUBSIDIARYCONSOLIDATED BALANCE SHEETS(Unaudited)(In thousands, except share data)**

|                                                                        | **June 30,**                                                                                                           |    | **September 30,** |    |
|-----------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------|---------|-------------------|---------|
|                                                                        | **2001******                                                                                                           |    | **2000******      |    |
| **ASSETS**                                                                  |                                                                                                                   |    |              |    |
|                                                                        |                                                                                                                   |    |              |    |
| Cash and cash  equivalents:                                                 |                                                                                                                   |    |              |    |
|                                                                        | Cash and due  from banks                                                                                               | $       | 7,458             |    | $ | 4,178 |   |
|                                                                        | Federal Funds  sold                                                                                                    | 9,500   |              | 6,000   |   |
|                                                                        |                                                                                                                   |         |              |         |   |
|                                                                        | Total cash and  cash equivalents                                                                                       | 16,958  |              | 10,178  |   |
|                                                                        |                                                                                                                   |         |              |         |   |
| Securities:                                                                 |                                                                                                                   |    |              |    |
|                                                                        | Available for  sale, at fair value (amortized cost of $111,260 at June 30, 2001 and $116,858  at September 30, 2000)   | 111,634 |         | 112,373 |     |
|                                                                        | Held to  maturity, at amortized cost (fair value of   $13,965 at June 30, 2001 and $16,081 at September 30, 2000) | 15,738  |         | 16,192  |     |
|                                                                        |                                                                                                                   |         |              |         |   |
|                                                                        | Total  securities                                                                                                      | 127,372 |              | 128,565 |   |
|                                                                        |                                                                                                                   |         |              |         |   |
| Real estate  mortgage loans held for sale, at lower of cost or market value | 6,904                                                                                                                  |    | 2,743             |    |
|                                                                        |                                                                                                                        |    |                   |    |
| Loans  receivable, net:                                                     |                                                                                                                   |    |              |    |
|                                                                        | Real estate  mortgage loans                                                                                            | 362,907 |              | 354,583 |   |
|                                                                        | Consumer and  commercial business loans                                                                                | 13,539  |              | 11,358  |   |
|                                                                        | Allowance for  loan losses                                                                                             | (1,918  | )                 | (1,703  | ) |
|                                                                        |                                                                                                                   |         |              |         |   |
|                                                                        | Total loans  receivable, net                                                                                           | 374,528 |              | 364,238 |   |
|                                                                        |                                                                                                                   |         |              |         |   |
| Accrued  interest receivable                                                | 3,286                                                                                                                  |    | 3,223             |    |
| Federal Home  Loan Bank  ("FHLB") stock                      | 9,298                                                                                                                  |    | 9,298             |    |
| Office  properties and equipment, net                                       | 1,591                                                                                                                  |    | 1,859             |    |
| Other assets                                                                | 10,120                                                                                                                 |    | 2,770             |    |
|                                                                        |                                                                                                                        |    |                   |    |
|                                                                        | Total assets                                                                                                           | $       | 550,057           |    | $ | 522,874 |   |
|                                                                        |                                                                                                                   |         |              |         |   |
|                                                                        |                                                                                                                   |    |              |    |
| **LIABILITIES AND STOCKHOLDERS' EQUITY**                                    |                                                                                                                   |    |              |    |
| Liabilities:                                                                |                                                                                                                   |    |              |    |
|                                                                        | Deposits                                                                                                               | $       | 374,507           |    | $ | 325,106 |   |
|                                                                        | Securities  repurchase agreements                                                                                      | 68,012  |              | 85,012  |   |
|                                                                        | FHLB advances                                                                                                          | 63,120  |              | 72,400  |   |
|                                                                        | Other  liabilities                                                                                                     | 3,792   |              | 5,474   |   |
|                                                                        |                                                                                                                   |         |              |         |   |
|                                                                        | Total  liabilities                                                                                                     | 509,431 |              | 487,992 |   |
|                                                                        |                                                                                                                   |         |              |         |   |
|                                                                        |                                                                                                                   |    |              |    |
| 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                                                                                            | 35,622  |              | 35,443  |   |
|                                                                        | Unallocated  common stock  held by employee stock  ownership plan ("ESOP")                              | (1,358  |   )          | (1,572  |   ) |
|                                                                        | Unamortized  awards of common stock under   management recognition plan ("MRP")                         | (110    |   )          | (329    |   ) |
|                                                                        | Treasury stock,  at cost (1,342,011 shares)                                                                            | (22,037 | )                 | (22,037 | ) |
|                                                                        | Retained  income, substantially restricted                                                                             | 28,238  |              | 26,032  |   |
|                                                                        | Accumulated  other comprehensive loss                                                                                  | 235     |              | (2,691  | ) |
|                                                                        |                                                                                                                   |         |              |         |   |
|                                                                        | Total  stockholders' equity                                                                                            | 40,626  |              | 34,882  |   |
|                                                                        |                                                                                                                   |         |              |         |   |
|                                                                        | $                                                                                                                      | 550,057 |              | $       | 522,874 |   |
|                                                                        |                                                                                                                        |    |                   |    |
|                                                                             |                                                                                                                        |         |                   |         |  |  |  |  |

 

Seeaccompanying notes to consolidated financial statements

 

 

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

 

|                           | **For the Three Months**                                       |   | **For the Nine Months** |   |
|--------------------------------|----------------------------------------------------------------|--------|-------------------------|--------|
|                           | **Ended June 30,******                                         |   | **Ended June 30,******  |   |
|                           | **2001******                                                   |   | **2000******            |   | **2001****** |   | **2000****** |   |
|                           |                                                           |   |                    |   |   |   |   |   |
| Interest and  dividend income: |                                                           |   |                    |   |   |   |   |   |
|                           | Loans                                                          | $      | 7,173                   |   | $ | 6,708 |   | $ | 21,029 |   | $ | 19,213 |   |
|                           | Securities                                                     | 2,128  |                    | 2,287  |   | 6,767 |   | 7,001 |   |
|                           | Other earning  assets                                          | 177    |                    | 234    |   | 768 |   | 574 |   |
|                           |                                                           |        |                    |        |   |  |   |  |   |
|                           | Total interest  and dividend income                            | 9,478  |                    | 9,229  |   | 28,564 |   | 26,788 |   |
|                           |                                                           |        |                    |        |   |  |   |  |   |
|                           |                                                           |   |                    |   |   |   |   |   |
| Interest  expense:             |                                                           |   |                    |   |   |   |   |   |
|                           | Deposits                                                       | 3,792  |                    | 3,106  |   | 11,009 |   | 8,584 |   |
|                           | Securities  repurchase agreements                              | 1,068  |                    | 1,381  |   | 3,441 |   | 4,560 |   |
|                           | FHLB advances                                                  | 1,059  |                    | 1,224  |   | 3,667 |   | 3,152 |   |
|                           |                                                           |        |                    |        |   |  |   |  |   |
|                           | Total interest  expense                                        | 5,919  |                    | 5,711  |   | 18,117 |   | 16,296 |   |
|                           |                                                           |        |                    |        |   |  |   |  |   |
|                           |                                                           |   |                    |   |   |   |   |   |
|                           | Net interest  income                                           | 3,559  |                    | 3,518  |   | 10,447 |   | 10,492 |   |
|                           |                                                           |   |                    |   |   |   |   |   |
| Provision for  loan losses     | 75                                                             |   | 75                      |   | 225 |   | 145 |   |
|                           |                                                                |   |                         |   |  |   |  |   |
|                           | Net interest  income after provision for loan losses           | 3,484  |                    | 3,443  |   | 10,222 |   | 10,347 |   |
|                           |                                                           |        |                    |        |   |  |   |  |   |
|                           |                                                           |   |                    |   |   |   |   |   |
| Non-interest  income:          |                                                           |   |                    |   |   |   |   |   |
|                           | Service  charges and fees                                      | 393    |                    | 361    |   | 1,157 |   | 976 |   |
|                           | Net gain on  sales of real estate mortgage loans held for sale | 138    |                    | 33     |   | 405 |   | 80 |   |
|                           | Net gain on  sales of securities                               | 64     |                    | 9      |   | 270 |   | 10 |   |
|                           | Other                                                          | 150    |                    | 10     |   | 281 |   | 75 |   |
|                           |                                                           |        |                    |        |   |  |   |  |   |
|                           | Total  non-interest income                                     | 745    |                    | 413    |   | 2,113 |   | 1,141 |   |
|                           |                                                           |        |                    |        |   |  |   |  |   |
|                           |                                                           |   |                    |   |   |   |   |   |
| Non-interest  expense:         |                                                           |   |                    |   |   |   |   |   |
|                           | Compensation  and benefits                                     | 1,633  |                    | 1,406  |   | 4,624 |   | 4,269 |   |
|                           | Occupancy and  equipment                                       | 366    |                    | 373    |   | 1,104 |   | 1,067 |   |
|                           | Data  processing service fees                                  | 219    |                    | 190    |   | 647 |   | 578 |   |
|                           | Federal  deposit insurance costs                               | 16     |                    | 14     |   | 48 |   | 66 |   |
|                           | Other                                                          | 559    |                    | 508    |   | 1,644 |   | 1,760 |   |
|                           |                                                           |        |                    |        |   |  |   |  |   |
|                           | Total  non-interest expense                                    | 2,793  |                    | 2,491  |   | 8,067 |   | 7,740 |   |
|                           |                                                           |        |                    |        |   |  |   |  |   |
|                           |                                                           |   |                    |   |   |   |   |   |
|                           | Income before  income tax expense                              | 1,436  |                    | 1,365  |   | 4,268 |   | 3,748 |   |
|                           |                                                           |   |                    |   |   |   |   |   |
| Income  tax  expense      | 458                                                            |   | 500                     |   | 1,498 |   | 1,385 |   |
|                           |                                                                |   |                         |   |  |   |  |   |
|                           |                                                           |   |                    |   |   |   |   |   |
|                           | Net income                                                     | $      | 978                     |   | $ | 865 |   | $ | 2,770 |   | $ | 2,363 |   |
|                           |                                                           |        |                    |        |   |  |   |  |   |
|                           |                                                           |   |                    |   |   |   |   |   |
| Earnings per  common share:    |                                                           |   |                    |   |   |   |   |   |
|                           | Basic                                                          | $      | 0.47                    |   | $ | 0.43 |   | $ | 1.35 |   | $ | 1.18 |   |
|                           | Diluted                                                        | 0.46   |                    | 0.42   |   | 1.31 |   | 1.15 |   |
|                           |                                                           |        |                    |        |   |  |   |  |   |
|                                |                                                                |        |                         |        |  |  |  |  |  |  |  |  |  |  |  |

 

See accompanyingnotes to consolidated financial statements

 

**YONKERS FINANCIALCORPORATION AND SUBSIDIARYCONSOLIDATED STATEMENTS OFCHANGES IN STOCKHOLDERS' EQUITY(Unaudited)****(Dollars in thousands, except per share data)**

|                           | **Common  Stock******                                                                |   | **Additional  Paid-in  Capital****** |   | **Unallocated  Common  Stock  Held  by ESOP****** |   | **Unamortized  Awards of  Common  Stock  Under MRP****** |   | **Treasury  Stock****** |   | **Retained  Income****** |   | **Accumulated  Other  Comprehensive  Income (Loss)****** |    | **Total  Stockholders'  Equity****** |   |
|--------------------------------|--------------------------------------------------------------------------------------|--------|--------------------------------------|--------|---------------------------------------------------|--------|----------------------------------------------------------|--------|-------------------------|--------|--------------------------|--------|----------------------------------------------------------|---------|--------------------------------------|--------|
| Balance at  September 30, 2000 | $                                                                                    | 36     |                                 | $      | 35,443                                            |   | $                                                        | (1,572 | )                       | $      | (329                     | )      | $                                                        | (22,037 | )                                    | $      | 26,032 |   | $ | (2,691 | ) | 34,882 |   |
|                           |                                                                                 |   |                                 |   |                                              |   |                                                     |   |                    |   |                     |   |                                                     |    |                                 |   |
|                           | Net income                                                                           | --     |                                 | --     |                                              | --     |                                                     | --     |                    | --     |                     | 2,770  |                                                     | --      |                                 | 2,770  |   |
|                           | Dividends paid  ($0.09 per share)                                                    | --     |                                 | --     |                                              | --     |                                                     | --     |                    | --     |                     | (564   | )                                                        | --      |                                 | (564   | ) |
|                           | Amortization of  MRP awards                                                          | --     |                                 | --     |                                              | --     |                                                     | 219    |                    | --     |                     | --     |                                                     | --      |                                 | 219    |   |
|                           | Tax benefits from vested MRP awards                                                  | --     |                            | 24     |                                         | --     |                                                | --     |               | --     |                | --     |                                                | --      |                            | 24     |     |
|                           | ESOP shares released for allocation  (21,426 shares)                                 | --     |                            | 155    |                                         | 214    |                                                | --     |               | --     |                | --     |                                                | --      |                            | 369    |     |
|                           | Change in net unrealized gain (loss) on  available-for sale securities, net of taxes | --     |                       | --     |                                    | --     |                                           | --     |          | --     |           | --     |                                           | 2,926   |                       | 2,926  |       |
|                           |                                                                                      |   |                                      |   |                                                   |   |                                                          |   |                         |   |                          |   |                                                          |    |                                      |   |   |
| Balance at June  30, 2001      | $                                                                                    | 36     |                                 | $      | 35,622                                            |   | $                                                        | (1,358 | )                       | $      | (110                     | )      | $                                                        | (22,037 | )                                    | $      | 28,238 |   | $ | 235 |   | $ | 40,626 |   |
|                           |                                                                                      |   |                                      |   |                                                   |   |                                                          |   |                         |   |                          |   |                                                          |    |                                      |   |
|                                |                                                                                      |        |                                      |        |                                                   |        |                                                          |        |                         |        |                          |        |                                                          |         |                                      |        |  |  |  |  |  |  |  |  |  |  |  |

 

Seeaccompanying notes to consolidated financial statements.

 

| **YONKERS FINANCIAL CORPORATION AND SUBSIDIARYCONSOLIDATED STATEMENTS OF CASH  FLOWS  (Unaudited)  (In thousands)** |
|---------------------------------------------------------------------------------------------------------------------|

 

 

|                                                                                  | **For the Nine Months  Ended June 30,******                                         |    |
|---------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------|---------|
|                                                                                  | **2001******                                                                        |    | **2000****** |   |
| Cash flows from operating activities:                                                 |                                                                                |    |   |   |
|                                                                                  | Net income                                                                          | $       | 2,770 |   | $ | 2,363 |   |
|                                                                                  | Adjustments to reconcile net income to  net cash provided by operating activities:  |    |     |   |     |
|                                                                                  | Provision for loan losses                                                           | 225     |   | 145 |   |
|                                                                                  | ESOP and MRP expense                                                                | 612     |   | 566 |   |
|                                                                                  | Depreciation and amortization expense                                               | 365     |   | 355 |   |
|                                                                                  | Amortization of deferred fees, discounts  and premiums, net                         | 362     |   | 182 |   |
|                                                                                  | Proceeds from sales of loans                                                        | 29,555  |   | 9,120 |   |
|                                                                                  | Net gain on sales of real estate  mortgage loans held for sale                      | (405    | ) | (80 | ) |
|                                                                                  | Net gain on sales of securities                                                     | (270    | ) | (10 | ) |
|                                                                                  | Changes in assets and liabilities                                                   |    |   |   |   |
|                                                                                  | Increase in accrued interest receivable                                             | (63     | ) | (593 | ) |
|                                                                                  | Increase in other assets                                                            | 102     |   | 221 |   |
|                                                                                  | (Decrease) increase  in accrued interest payable                               | (466    | ) | 737 |   |
|                                                                                  | (Decrease) increase in accrued taxes  payable                                       | (770    | ) | 1,287 |   |
|                                                                                  | Decrease in accrued expenses and other  liabilities                                 | (583    | ) | (2,118 | ) |
|                                                                                  |                                                                                     |    |  |   |
|                                                                                  | Net cash provided by operating  activities                                          | 31,434  |   | 12,175 |   |
|                                                                                  |                                                                                     |    |  |   |
| Cash flows from investing activities:                                                 |                                                                                |    |   |   |
|                                                                                  | Purchases of securities:                                                            |    |   |   |   |
|                                                                                  | Available-for-sale                                                                  | (30,655 | ) | (1,684 | ) |
|                                                                                  | Held-to-maturity                                                                    | (3,750  | ) | -- |   |
|                                                                                  | Proceeds from principal payments,  maturities and calls of securities:              |    |   |   |   |
|                                                                                  | Available-for-sale                                                                  | 22,901  |   | 5,745 |   |
|                                                                                  | Held-to-maturity                                                                    | 4,175   |   | 4,646 |   |
|                                                                                  | Proceeds from sales of  available-for-sale securities                               | 13,493  |   | 185 |   |
|                                                                                  | Disbursements for loan originations                                                 | (80,556 | ) | (100,016 | ) |
|                                                                                  | Principal collections on loans                                                      | 36,516  |   | 23,879 |   |
|                                                                                  | Purchase of FHLB stock                                                              | --      |   | (1,901 | ) |
|                                                                                  | Purchase of Bank Owned Life Insurance                                               | (9,238  | ) | -- |   |
|                                                                                  | Other investing cash flows                                                          | (97     | ) | (342 | ) |
|                                                                                  |                                                                                     |    |  |   |
|                                                                                  | Net cash used in investing activities                                               | (47,211 | ) | (69,488 | ) |
|                                                                                  |                                                                                     |    |  |   |
| Cash flows from financing activities:                                                 |                                                                                |    |   |   |
|                                                                                  | Net increase in deposits                                                            | 49,401  |   | 46,739 |   |
|                                                                                  | Net (decrease) increase in borrowings  with original terms of three months or less: |    |     |   |     |
|                                                                                  | Securities repurchase agreements                                                    | --      |   | (22,949 | ) |
|                                                                                  | FHLB advances                                                                       | --      |   | 12,325 |   |
|                                                                                  | (Repayment of) Proceeds from longer-term  borrowings                                | (26,280 | ) | 28,101 |   |
|                                                                                  | Common stock repurchased                                                            | --      |   | (171 | ) |
|                                                                                  | Dividends paid                                                                      | (564    | ) | (575 | ) |
|                                                                                  |                                                                                     |    |  |   |
|                                                                                  | Net cash provided by financing  activities                                          | 22,557  |   | 63,470 |   |
|                                                                                  |                                                                                     |    |  |   |
|                                                                                  |                                                                                |    |   |   |
| Net increase in cash and cash  equivalents                                            | 6,780                                                                               |    | 6,157 |   |
| Cash and cash equivalents at beginning  of the period                                 | 10,178                                                                              |    | 4,651 |   |
|                                                                                  |                                                                                     |    |  |   |
|                                                                                  |                                                                                |    |   |   |
| Cash and cash equivalents at end of  the period                                  | $                                                                                   | 16,958  |   | $ | 10,808 |   |
|                                                                                  |                                                                                     |    |  |   |
|                                                                                  |                                                                                |    |   |   |
| Supplemental information:                                                             |                                                                                |    |   |   |
| Noncash Transfers-                                                                    |                                                                                |    |   |   |
| Change in unrealized gain/(loss) on  valuation of investments available-for-sale, net | $                                                                                   | 2,926   |     | (944 |   ) |
|                                                                                  |                                                                                |    |   |   |
| Cash paid for-                                                                        |                                                                                |    |   |   |
|                                                                                  | Interest paid                                                                       | $       | 18,583 |   | $ | 10,057 |   |
|                                                                                  | Income taxes paid                                                                   | 2,170   |   | -- |   |
|                                                                                  |                                                                                     |    |  |   |
|                                                                                       |                                                                                     |         |  |  |  |  |  |  |  |  |  |  |  |

 

| See accompanying notes to consolidated financial statements |
|-------------------------------------------------------------|

 

 

**YONKERSFINANCIAL CORPORATION AND SUBSIDIARYNotes to Consolidated FinancialStatements(Unaudited)**

(1)  Basisof Presentation

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

             OnMarch 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 theREIT.  On June 30, 2001 $96.4 million inreal estate loans were held by the REIT. The assets transferred to the REIT areviewed by regulators as part of the Association’s assets in consolidation.

             Theunaudited consolidated financial statements included herein have been preparedin conformity with accounting principles generally accepted in the UnitedStates of America.  In the opinion ofmanagement, the unaudited consolidated financial statements include alladjustments, consisting of normal recurring accruals, necessary for a fairpresentation of the financial position and results of operations for theinterim periods presented.  The resultsof operations for the nine months ended June 30, 2001 are not necessarilyindicative of the results of operations which may be expected for the fiscalyear ending September 30, 2001.

             Certainfinancial information and footnote disclosures normally included in annualfinancial statements prepared in conformity with accounting principlesgenerally accepted in the United States of America have been omitted pursuantto the rules and regulations of the Securities and Exchange Commission.  The unaudited interim consolidated financialstatements presented herein should be read in conjunction with the annualconsolidated financial statements of the Company as of and for the fiscal year endedSeptember 30, 2000, included in the Form 10-K.

(2) Comprehensive Income

             Comprehensiveincome represents net income and certain amounts reported directly instockholders’ equity, such as the net unrealized gain or loss on securitiesavailable for sale. Total comprehensive income for the nine months ended June30, 2001 was $5.7 million consisting of a net decrease of $2.9 million in theafter-tax net unrealized loss on available-for-sale securities and $2.8 millionin net income.  For the nine months endedJune 30, 2000, total comprehensive income of $1.4 million consisted of netincome of $2.4 million, less a net decrease of $944,000 in the after-tax netunrealized gain on available-for-sale securities.

(3) EarningsPer Share

             BasicEPS excludes dilution and is computed by dividing income available to commonstockholders by the weighted-average number of common shares outstanding forthe period.  Diluted EPS reflects thepotential dilution that could occur if securities or other contracts to issuecommon stock (such as stock options) were exercised or converted into commonstock or resulted in the issuance of common stock that then shared in theearnings of the entity.  Diluted EPS iscomputed by dividing net income by the weighted average number of common sharesoutstanding for the period plus common-equivalent shares computed using thetreasury stock method. Unallocated ESOP shares that have not been committed tobe released to participants are excluded from outstanding shares in computingboth basic and diluted EPS.

             The following is asummary of the number of shares utilized in the Company’s EPS calculations forthe three and nine months ended June 30, 2001 and 2000. For purposes ofcomputing basic EPS, net income applicable to common stock equaled net incomefor both periods presented.

|                                                                                     | **For the Three Months** |          | **For the Nine Months** |          |
|------------------------------------------------------------------------------------------|--------------------------|---------------|-------------------------|---------------|
|                                                                                     | **Ended June 30,**       |          | **Ended June 30,**      |          |
|                                                                                     | **2001******             |          | **2000******            |          | **2001****** |   | **2000****** |   |
|                                                                                     | (In  thousands)          |          | (In  thousands)         |          |
|                                                                                     |                     |          |                    |          |   |   |   |   |
| Weighted average common shares  outstanding for computation of basic EPS (1)        | 2,064                    |     | 2,012                   |     | 2,056 |     | 2,009 |      |
| Common-equivalent shares due to the  dilutive effect of stock options and MRP awards (2) | 79                       | (3)           | 32                      | (4)           | 58 | (5) | 48 | (6) |
|                                                                                     |                          |          |                         |          |  |   |  |   |
| Weighted average common shares for  computation of diluted EPS                           | 2,144                    |     | 2,044                   |     | 2,114 |     | 2,057 |      |
|                                                                                     |                          |          |                         |          |  |   |  |   |
|                                                                                          |                          |               |                         |               |  |  |  |  |  |

----

|   | (1) | Excludes unvested MRP awards and unallocated ESOP  shares that have not been committed to be released.                                                                                                                                                                                                                                                 |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (2) | Computed using the treasury stock method.                                                                                                                                                                                                                                                                                                              |
|   | (3) | Options to purchase 3,000 shares of common stock at  a prices of  $21.63 per share was  outstanding at June 30, 2001, but was not included in the computation of  diluted EPS because the option exercise prices were greater than the average  market price of the common shares for the quarter ended June 30, 2001.                            |
|   | (4) | Options to purchase 20,000 shares of common stock at  prices between $16.63 per share and $21.63 per share were outstanding at  June 30, 2000, but were not included in  the computation of diluted EPS because the option exercise prices were greater  than the average market price of the common shares for the quarter ended June  30, 2000. |
|   | (5) | Options to purchase 27,250 shares of common stock at  prices between $18.00 per share and $21.63 per share were outstanding at June  30, 2001, but were not included in the computation of diluted EPS because the  option exercise prices were greater than the average market price of the  common shares for the nine months ended June 30, 2001.   |
|   | (6) | Options to purchase 20,000 shares of common stock at  $prices between 16.63 per share and $21.63 per share were outstanding at June  30, 2000, but were not included in the computation of diluted EPS because the  option exercise price was greater than the average market price of the common  shares for the nine months ended June 30, 2000.     |

 

4) Accounting for Derivatives and Hedging Activities

             EffectiveOctober 1, 2000, the Company adopted the provisions of Statement of FinancialAccounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instrumentsand Hedging Activities”. SFAS No. 133 required the recognition of allderivative financial instruments as either assets or liabilities in thestatement of financial condition and measurement of those instruments at fairvalue.  Changes in the fair value ofthose derivatives are reported in current operations or other comprehensiveincome depending on the use of the derivative and whether it qualifies forhedge accounting.  The accounting forgains and losses associated with changes in the fair value of a derivative andthe effect on the consolidated financial statements will depend on its hedgedesignation and whether the hedge is highly effective in achieving offsettingchanges in the fair value or cash flows of the asset or liability hedged.  Under the provisions of SFAS No. 133, themethod used for assessing the effectiveness of a hedging derivative, as well asthe measurement approach for determining the ineffective aspects of the hedge,must have been established at the inception of the hedge.

             The derivativeinstruments held by the Company as of October 1, 2000 consisted of forward loansales commitments and fixed-rate conforming loan commitments.  The forward loan sales commitments and thefixed-rate conforming loan commitments do not qualify for hedge accountingunder the provisions of SFAS No. 133. Based on market rates and economic conditions on October 1, 2000, theadoption of SFAS No. 133 as of October 1, 2000 did not have a material effecton the Company’s consolidated financial statements, and accordingly, there isno cumulative effect of a change in accounting principle presented.  In addition, the effect of the adjustment tofair value of the Company’s derivatives during the nine months ended June 30,2001 was not significant.  However,there may be increased volatility in net income and stockholders’ equity on anongoing basis as a result of accounting for derivative instruments inaccordance with SFAS No. 133.

**Part I. Item 2.**

**Management’sDiscussion and Analysis of Financial Condition and Results of Operations**

**Forward-Looking Statements**

             Whenused in this Form 10-Q or future filings by the Company with the Securities andExchange Commission, in the Company’s press releases or other public orshareholder communications, or in oral statements made with the approval of anauthorized executive officer, the words or phrases “will likely result”, “areexpected to”, “will continue”, “is anticipated”, “estimate”, “project”,“believe” or similar expressions are intended to identify “forward-lookingstatements” within the meaning of the Private Securities Litigation Reform Actof 1995.  The Company wishes to cautionreaders not to place undue reliance on any forward-looking statements, whichspeak only as of the date made, and to advise readers that various factors,including regional and national economic conditions, changes in levels ofmarket interest rates, credit risks of lending activities, and competitive andregulatory factors, could affect the Company’s financial performance and couldcause actual results for future periods to differ materially from thoseanticipated or projected.

             TheCompany does not undertake, and specifically disclaims any obligation, topublicly release the result of any revisions which may be made to anyforward-looking statements to reflect the occurrence of anticipated orunanticipated events or circumstances after the date of such statements.

**Comparisonof Financial Condition at June 30, 2001 and September 30, 2000**

             Totalassets at June 30, 2001 amounted to $550.1 million, representing an increase of $27.2 million from $522.9 at September30, 2000. Asset growth during the period reflected increases in total loans andother assets funded by deposits reflecting the continued growth of theCompany’s retail franchise.

             Overall,total loans  (loans receivable andmortgage loans held for sale) increased $14.4 million to $381.4 million at June30, 2001 from $367.0 million at September 30, 2000, substantially reflectingincreases in multi-family and mixed-use commercial real estate loan balances.The loan growth during the nine months ended June 30, 2001 is primarilyattributable to loan originations net of repayments of $43.9 million less loanssold of $29.5 million. Other assets increased $7.3 million to $10.1 million atJune 30, 2001 from $2.8 million at September 30, 2000 primarily reflecting theCompany’s $9.0 million purchase of Bank-Owned Life Insurance (“BOLI”).  In January 2001, the Company invested inBOLI policies to fund employee benefit costs. The cash surrender value of the BOLI policies is recorded on theCompany’s balance sheet as other assets and the change in the cash surrendervalue is recorded as other income. Total cash and cash equivalents at June 30, 2001 increased $6.8 millionto $17.0 million from $10.2 million at September 30, 2000.  Total securities at June 30, 2001 decreased$1.2 million to $127.4 million at June 30, 2001 from $128.6 million atSeptember 30, 2000.

             Depositliabilities increased $49.4 million to $374.5 million at June 30, 2001 from$325.1 million at September 30, 2000. The increase in deposit liabilities is primarily attributable to theexpansion of the Company’s retail franchise as well as aggressive cross-sellingprograms. Total borrowings decreased by $26.3 million to $131.1 million at June30, 2001 from $157.4 million at September 30, 2000.

             Stockholders’equity increased by $5.7 million to $40.6 million at June 30, 2001 from  $34.9 million at September 30, 2000.  The increase is primarily attributable to animprovement of $2.9 million in the net unrealized after tax gain in the marketvalue of securities available for sale, an increase in net income retainedafter dividends of $2.2 million, and a combined increase of $612,000 relatingto the employee stock ownership plan and the management recognition plan.  The ratio of stockholders’ equity to totalassets increased to 7.4% at June 30, 2001 from 6.7 % at September 30,2000.  Book value per share (computedbased on total shares issued less treasury shares) increased to $18.23 at June30, 2001, from $15.65 at September 30, 2000. See “Liquidity and CapitalResources” for information regarding the Association’s regulatory capitalamounts and ratios.

**Analysisof Net Interest Income**

             The following table sets forth theCompany’s average balance sheets, average yields and costs (on an annualizedbasis), and certain other information for the three and nine months ended June30, 2001 and 2000. The yields and costs were derived by dividing interestincome or expense by the average balance of assets or liabilities, respectively,for the periods shown. Substantially all average balances were computed basedon daily balances. Interest income includes the effect of deferred fees,discounts, and premiums which are considered yield adjustments.

 

|                                                                              | **For the Three Months Ended June 30,****** |    |
|-----------------------------------------------------------------------------------|---------------------------------------------|---------|
|                                                                              | **2001******                                |    | **2000****** |   |
|                                                                              |                                        |    |   |   | **Average** |   | **Average** |   |   |   |   |   |
|                                                                              | **Balance******                             |    | **Interest****** |   | **Yield/Cost****** |   | **Balance****** |   | **Interest****** |   | **Yield/Cost****** |   |
| **Assets**                                                                        | **(Dollars in thousands)******              |    |
| Interest-earning  assets:                                                         |                                        |    |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Loans (1)                                   | $       | 378,184 |   | $ | 7,173 |   | 7.59 | % | $ | 364,641 |   | $ | 6,708 |   | 7.36 | % |
|                                                                              | Mortgage-backed  securities (2)             | 81,611  |   | 1,278 |   | 6.26 |   | 87,635 |   | 1,516 |   | 6.92 |   |
|                                                                              | Other  securities (2)                       | 46,373  |   | 850 |   | 7.33 |   | 41,278 |   | 771 |   | 7.47 |   |
|                                                                              | Other earning  assets                       | 15,774  |   | 177 |   | 4.49 |   | 14,131 |   | 234 |   | 6.62 |   |
|                                                                              |                                        |         |   |  |   |   |   |  |   |  |   |   |   |
|                                                                              | Total interest-earning  assets              | 521,942 |   | $ | 9,478 |   | 7.26 |   | 507,685 |   | $ | 9,229 |   | 7.27 |   |
|                                                                              |                                        |    |   |   |  |   |   |   |   |   |   |  |   |   |   |
|                                                                         |                                   |    |    |   |    |   |    |   |    |   |   |   |
| Allowance for  loan losses                                                        | (1,870                                      | )       |    |   |    |   | (1,571 | ) |    |   |    |   |
| Non-interest-earning  assets                                                      | 19,018                                      |    |    |   |    |   | 11,320 |   |    |   |    |   |
|                                                                              |                                             |    |   |   |   |   |  |   |   |   |   |   |
|                                                                              | Total assets                                | $       | 539,090 |   |    |   |    |   | $ | 517,434 |   |    |   |    |   |
| **Liabilities and  Stockholders'  Equity**                                   |                                   |    |    |   |    |   |    |   |    |   |    |   |
| Interest-bearing  liabilities:                                                    |                                   |    |    |   |    |   |    |   |    |   |    |   |
|                                                                              | NOW, club and  money market accounts        | $       | 63,543 |   | $ | 305 |   | 1.92 | % | $ | 64,102 |   | $ | 341 |   | 2.13 | % |
|                                                                              | Regular savings  accounts (3)               | 78,207  |   | 580 |   | 2.97 |   | 57,054 |   | 242 |   | 1.70 |   |
|                                                                              | Savings  certificate accounts               | 206,786 |   | 2,907 |   | 5.62 |   | 188,993 |   | 2,523 |   | 5.34 |   |
|                                                                              |                                        |         |   |  |   |   |   |  |   |  |   |   |   |
|                                                                              | Total  interest-bearing deposits            | 348,536 |   | 3,792 |   | 4.35 |   | 310,149 |   | 3,106 |   | 4.01 |   |
|                                                                              |                                        |    |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Borrowings                                  | 133,183 |   | 2,127 |   | 6.39 |   | 170,718 |   | 2,605 |   | 6.10 |   |
|                                                                              |                                        |         |   |  |   |   |   |  |   |  |   |   |   |
|                                                                              | Total  interest-bearing liabilities         | 481,719 |   | $ | 5,919 |   | 4.91 |   | 480,867 |   | $ | 5,711 |   | 4.75 |   |
|                                                                              |                                        |    |   |   |  |   |   |   |   |   |   |  |   |   |   |
|                                                                         |                                   |    |    |   |    |   |    |   |    |   |   |   |
| Non-interest-bearing  liabilities                                                 | 18,394                                      |    |    |   |    |   | 4,516 |   |    |   |    |   |
|                                                                              |                                             |    |   |   |   |   |  |   |   |   |   |   |
|                                                                              | Total  liabilities                          | 500,113 |   |    |   |    |   | 485,383 |   |    |   |    |   |
|                                                                         |                                   |    |    |   |    |   |   |   |   |   |   |   |
| Stockholders'  equity                                                             | 38,977                                      |    |    |   |    |   | 32,051 |   |    |   |    |   |
|                                                                              |                                             |    |   |   |   |   |  |   |   |   |   |   |
|                                                                              | Total  liabilities and stockholders' equity | $       | 539,090 |   |    |   |    |   | $ | 517,434 |   |    |   |    |   |
|                                                                              |                                        |         |   |   |   |   |   |  |   |   |   |   |   |
| Net interest  income                                                              |                                   |    | $ | 3,559 |   |    |   |    |   | $ | 3,518 |   |    |   |
|                                                                              |                                        |    |  |   |   |   |   |   |  |   |   |   |
| Average  interest rate spread (4)                                                 |                                   |    |    |   | 2.35 | % |    |   |    |   | 2.52 | % |
| Net interest  margin (5)                                                          |                                   |    |    |   | 2.73 | % |    |   |    |   | 2.77 | % |
| Net  interest-earning assets (6)                                                  | $                                           | 40,223  |   |    |   |   |   | $ | 26,818 |   |   |   |   |   |
|                                                                              |                                             |    |   |   |   |   |  |   |   |   |   |   |
| Ratio of  average interest-earning assets to average interest-bearing liabilities |                                   |    |    |   | 108.35 | % |    |   |    |   | 105.58 | % |
|                                                                                   |                                             |         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

----

| (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.                                                                          |

 

 

|   |   |   |   |   |   |   |   |   |
|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   |   |   |   |   |   |   |   |   |

 

|                                                                              | **For the Nine Months Ended June 30,******  |
|-----------------------------------------------------------------------------------|---------------------------------------------|
|                                                                              | **2001******                                |   | **2000****** |   |
|                                                                              | **Averag  Balance******                     |   | **Interest****** |   | **Average Yield/Cost****** |   | **Averag**** ****Balance****** |   | **Interest****** |   | **Average Yield/Cost****** |   |
| **Assets**                                                                        | **(Dollars in thousands)**                  |
| Interest-earning  assets:                                                         |                                        |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Loans (1)                                   | $ | 373,617 |   | $ | 21,029 |   | 7.50 | % | $ | 349,310 |   | $ | 19,213 |   | 7.33 | % |
|                                                                              | Mortgage-backed  securities (2)             | 83,606 |   | 4,148 |   | 6.62 | % | 91,725 |   | 4,712 |   | 6.85 | % |
|                                                                              | Other  securities (2)                       | 47,338 |   | 2,619 |   | 7.38 | % | 41,029 |   | 2,289 |   | 7.44 | % |
|                                                                              | Other earning  assets                       | 19,203 |   | 768 |   | 5.33 | % | 13,546 |   | 574 |   | 5.65 | % |
|                                                                              |                                             |   |  |   |   |   |  |   |  |   |   |   |
|                                                                              | Total  interest-earning assets              | 523,764 |   | $ | 28,564 |   | 7.27 | % | 495,610 |   | $ | 26,788 |   | 7.21 | % |
|                                                                              |                                        |   |  |   |   |   |   |   |  |   |   |   |
|                                                                              |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for  loan losses                                                        | (1,798                                      | ) |    |   |    |   | (1,548 | ) |    |   |    |   |
| Non-interest-earning  assets                                                      | 15,551                                      |   |    |   |    |   | 11,552 |   |    |   |    |   |
|                                                                              |                                             |   |   |   |   |   |  |   |   |   |   |   |
|                                                                              | Total assets                                | $ | 537,517 |   |    |   |    |   | $ | 505,614 |   |    |   |    |   |
|                                                                              |                                             |   |   |   |   |   |  |   |   |   |   |   |
| **Liabilities and  Stockholders'  Equity**                                   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing  liabilities:                                                    |                                        |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | NOW, club and  money market accounts        | $ | 64,386 |   | $ | 980 |   | 2.03 | % | $ | 62,294 |   | $ | 1,006 |   | 2.15 | % |
|                                                                              | Regular savings  accounts (3)               | 65,499 |   | 1,184 |   | 2.41 | % | 54,958 |   | 715 |   | 1.73 | % |
|                                                                              | Savings  certificate accounts               | 204,049 |   | 8,845 |   | 5.78 | % | 176,782 |   | 6,863 |   | 5.18 | % |
|                                                                              |                                             |   |  |   |   |   |  |   |  |   |   |   |
|                                                                              | Total  interest-bearing deposits            | 333,934 |   | 11,009 |   | 4.40 | % | 294,034 |   | 8,584 |   | 3.89 | % |
|                                                                              |                                        |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Borrowings                                  | 148,462 |   | 7,108 |   | 6.38 | % | 175,077 |   | 7,712 |   | 5.87 | % |
|                                                                              |                                             |   |  |   |   |   |  |   |  |   |   |   |
|                                                                              | Total  interest-bearing liabilities         | 482,396 |   | $ | 18,117 |   | 5.01 | % | 469,111 |   | $ | 16,296 |   | 4.63 | % |
|                                                                              |                                        |   |  |   |   |   |   |   |  |   |   |   |
| Non-interest-bearing  liabilities                                                 | 18,179                                      |   |    |   |    |   | 4,546 |   |    |   |    |   |
|                                                                              | Total  liabilities                          | 500,575 |   |    |   |    |   | 473,657 |   |    |   |    |   |
|                                                                              |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Stockholders'  equity                                                             | 36,942                                      |   |    |   |   |   | 31,957 |   |    |   |   |   |
|                                                                              |                                             |   |   |   |   |   |  |   |   |   |   |   |
|                                                                              | Total  liabilities and stockholders' equity | $ | 537,517 |   |    |   |   |   | $ | 505,614 |   |    |   |   |   |
|                                                                              |                                             |   |   |   |   |   |  |   |   |   |   |   |
| Net interest  income                                                              |                                   |   | $ | 10,447 |   |    |   |    |   | $ | 10,492 |   |    |   |
|                                                                              |                                        |   |  |   |   |   |   |   |  |   |   |   |
| Average  interest rate spread (4)                                                 |                                   |   |    |   | 2.26 | % |    |   |    |   | 2.58 | % |
| Net interest  margin (5)                                                          |                                   |   |    |   | 2.66 | % |   |   |   |   | 2.82 | %  |
| Net  interest-earning assets (6)                                                  | $                                           | 41,368 |   |    |   |    |   | $ | 26,499 |   |    |   |    |   |
|                                                                              |                                             |   |   |   |   |   |  |   |   |   |   |   |
| Ratio of average interest-earning  assets to average interest-bearing liabilities |                                   |   |    |     | 108.58 |   % |    |     |    |     | 105.65 |   % |
|                                                                                   |                                             |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

----

| (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.                                                                          |

 

             The followingtable presents the extent to which changes in interest rates and changes in thevolume of interest-earning assets and interest-bearing liabilities affected theCompany's interest income and interest expense during the three months and ninemonths ended June 30, 2001, compared to the same period in the prior year.Information is provided in each category with respect to (i) changesattributable to changes in volume (changes in volume multiplied by prior rate),(ii) changes attributable to changes in rate (changes in rate multiplied byprior volume), and (iii) the net change. The changes attributable to thecombined impact of volume and rate have been allocated proportionately to thechanges due to volume and the changes due to rate.

|                              | **For the Quarter Ended June 30,**  |       | **For the Nine Months Ended June 30,** |       |
|-----------------------------------|-------------------------------------|------------|----------------------------------------|------------|
|                              | **2001 Compared to 2000******       |       | **2001 Compared to 2000******          |       |
|                              | **Increase (Decrease)**             |       |                                   |       | **Increase (Decrease)** |   |   |   |
|                              | **Due to******                      |       | **Net**                                |       | **Due to****** |   | **Net** |   |
|                              | **Volume******                      |       | **Rate******                           |       | **Change****** |   | **Volume****** |   | **Rate****** |   | **Change****** |   |
|                              | **(In thousands)**                  |       |
| Interest-earning assets:          |                                | ** ** |                                   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |
|                              | Loans                               | $          | 253                                    |       | $ | 212 |   | $ | 465 |   | $ | 1,342 |   | $ | 474 |   | $ | 1,816 |   |
|                              | Mortgage-backed securities          | (100       | )                                      | (138       | ) | (238 | ) | (409 | ) | (155 | ) | (564 | ) |
|                              | Other securities                    | 94         |                                   | (15        | ) | 79 |   | 349 |   | (19 | ) | 330 |   |
|                              | Other earning assets                | 25         |                                   | (82        | ) | (57 | ) | 228 |   | (34 | ) | 194 |   |
|                              |                                |            |                                   |            |   |  |   |  |   |  |   |  |   |
|                              | Total                               | 272        |                                   | (23        | ) | 249 |   | 1,510 |   | 266 |   | 1,776 |   |
|                              |                                |            |                                   |            |   |  |   |  |   |  |   |  |   |
| Interest-bearing liabilities:     |                                |       |                                   |       |   |   |   |   |   |   |   |   |
|                              | NOW, club and money market accounts | (3         | )                                      | (33        | ) | (36 | ) | 32 |   | (58 | ) | (26 | ) |
|                              | Regular savings accounts            | 112        |                                   | 226        |   | 338 |   | 154 |   | 315 |   | 469 |   |
|                              | Savings certificate accounts        | 247        |                                   | 137        |   | 384 |   | 1,132 |   | 850 |   | 1,982 |   |
|                              | Borrowings                          | (597       | )                                      | 119        |   | (478 | ) | (1,237 | ) | 633 |   | (604 | ) |
|                              |                                |            |                                   |            |   |  |   |  |   |  |   |  |   |
|                              | Total                               | (241       | )                                      | 449        |   | 208 |   | 81 |   | 1,740 |   | 1,821 |   |
|                              |                                |            |                                   |            |   |  |   |  |   |  |   |  |   |
|                              |                                |       |                                   |       |   |   |   |   |   |   |   |   |
| Net change in net interest income | $                                   | 513        |                                   | $          | (472 | ) | $ | 41 |   | $ | 1,429 |   | $ | (1,474 | ) | $ | (45 | ) |
|                              |                                     |       |                                        |       |  |   |  |   |  |   |  |   |
|                                   |                                     |            |                                        |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

**Comparisonof Operating Results for the Three Months Ended June 30, 2001 and 2000.**

***             General.*** Net income for the three months ended June 30, 2001 was $978,000 ordiluted EPS of $0.46 compared to net income of $865,000 or diluted EPS of $0.42for the quarter ended June 30, 2000. Basic earnings per common share were $0.47 for the quarter ended June30, 2001 compared to $0.43 for the same period in 2000. The increase in netincome of $113,000 reflects an increase of $332,000 in non-interest income, a$42,000 decrease in income tax expense, a $41,000 increase in net interestincome, partially offset by a $302,000 increase in non-interest expense.

***             Net Interest Income***Net interest income for the quarter endedJune 30, 2001 was $3.6 million, an increase of $41,000 compared to the sameperiod in the prior year.  The increaseprimarily reflects an increase in interest-earning assets primarilyattributable to the investment proceeds of deposit growth, partially offset bya decline in the average interest rate spread. The decline in the average interest rate spread is primarily a result ofan increase in the Company’s cost of funds. The Company’s average interest rate spread decreased to 2.35% for thequarter ended June 30, 2001 from 2.52% for the same quarter last year, whilethe net interest margin decreased to 2.73% for the 2001 three month period from2.77% a year earlier.  Net interestincome in the current period was also negatively affected by the BOLIinvestment which is included in non-interest income.

***             Interest Income.*** Interest and dividend income totaled$9.5 million for the three months ended June 30, 2001, an increase of $249,000compared to $9.2 million for the three months ended June 30, 2000.  This increase reflects the effect of a $14.3million increase in total average interest-earning assets, partially offset bya 1 basis point decrease in the average yield on such assets to 7.26% for thethree months ended June 30, 2001 from 7.27% for the same period in the prioryear.

             Interestincome on loans increased $465,000 for the three months ended June 30, 2001compared to the same period in the prior year, reflecting the effect of a $13.5million increase in the average balance and a 23 basis point increase in theaverage yield.  The increase in theaverage balance of loans and the average yield was primarily attributable to anincrease in multi-family and mixed-use commercial real estate loans with higheryields.

             On acombined basis, interest and dividend income on mortgage-backed and othersecurities was $2.1 million for the three months ended June 30, 2001, adecrease of $159,000 compared to the same period in the prior year.  Interest on mortgage-backed securitiesdecreased by $238,000 attributable to the effects of a $6.0 million decrease inthe average balance and an 66 basis point decrease in the average yield.Interest on other securities increased by $79,000, primarily attributable to a$5.1 million increase in the average balance, partially offset by a 14 basispoint decrease in the average yield.

             Interestand dividend income on other earning assets decreased $57,000, primarilyattributable to a 213 basis point decrease in the average yield, partiallyoffset by a $1.6 million increase in the average balance.  The decrease in the average yield primarilyreflects a 275 basis point decrease in short-term interest rates by the FederalReserve since  June 30, 2000.

***             Interest Expense***. Interest expense totaled $5.9 millionfor the three months ended June 30, 2001, an increase of $208,000 from theprior year’s quarter.

             Interestexpense on deposits increased $686,000 compared to the same period in the prioryear, reflecting the effect of a $38.4 million increase in the average balanceand a 34 basis point increase in the average rate on interest-bearing depositsto 4.35% for the three months ended June 30, 2001 from 4.01% for the threemonths ended June 30, 2000.  Theincrease in average interest-bearing deposits consisted of a $21.2 millionincrease in average regular savings accounts (to $78.2 million from $57.0million), a $17.8 million increase in average savings certificate accounts (to$206.8 million from $189.0 million), partially offset by a $559,000 decrease inaverage NOW, club and money market accounts (to $63.5 million from $64.1million).

             Interest expenseon borrowings decreased $478,000 to $2.1 million for the three months endedJune 30, 2001 from $2.6 million for the three months ended June 30, 2000.  Total borrowings averaged $133.2 million forthe three months ended June 30, 2001 at an average rate of 6.39% compared to$170.7 million and 6.10%, respectively, for the prior-year quarter.  See “Liquidity and Capital Resources” forfurther discussion of the Company’s securities repurchase agreements.

***             Provision for Loan Losses.**** *The Company records provisions for loan losses,which are charged to earnings, in order to maintain the allowance for loanlosses at a level which is considered appropriate to absorb probable lossesinherent in the existing loan portfolio. The provision in each period reflectsmanagement’s evaluation of the adequacy of the allowance for loan losses.Factors considered include the volume and type of lending conducted, theCompany’s previous loan loss experience, the known and inherent risks in theloan portfolio, adverse situations that may affect the borrowers’ ability torepay, the estimated value of any underlying collateral, and current economicconditions.

             Theprovision for loan losses was $75,000 for the three months ended June 30, 2001and 2000, respectively.  Non-performingloans totaled $209,000 at June 30, 2001, compared to $123,000 at September 30,2000 and $285,000 at June 30, 2000.  See“Asset Quality” for a further discussion of the Company’s non-performing assetsand allowance for loan losses.

***Non-Interest Income***. Non-interest income for the threemonths ended June 30, 2001 increased $332,000 to $745,000, from $413,000 forthe comparable period in 2000.  Theincrease primarily reflects a $140,000 increase in other non-interest income, a$105,000 increase in the net gain on sales of real estate mortgage loans heldfor sale, a $55,000 increase in the net gain on sales of securities, and a$32,000 increase in service charges and fee income. The increase in othernon-interest income primarily reflects income from the Company’s BOLI. The increasein the net gain on sale of real estate mortgage loans held for sale reflectsmortgage loans sold of $10.9 million for the three months ended June 30, 2001,as compared to loan sales of $3.5 million for the period ended June 30, 2000.  The increase in sales volume is consistentwith management’s strategy to sell a portion of one-to-four family residentialreal estate originations in the secondary market and supplement its portfoliowith higher-yielding multi-family and mixed-use commercial real estate loans.The increase in the net gain on sales of securities reflects sales of $3.4million for the three months ended June 30, 2001, as compared to sales of$77,000 for the period ended June 30, 2000. The increase in service charges and fee income resulted primarily fromincreases in transaction volume.

***             Non-interest Expense***. Non-interest expense increased $302,000 to $2.8 million for the threemonths ended June 30, 2001, compared to $2.5 million for the three months endedJune 30, 2000.  The increase is primarilyattributable to an increase of $227,000 in compensation and benefitsexpense.  The increase in compensationand benefits expense primarily reflects an increase in the number of employeesand merit and performance-based increases for management and staff members, aswell as increased ESOP expenses resulting from an increase in the Company’sstock price.

***             Income Tax Expense***. Income tax expense for the three months ended June 30, 2001 was $458,000and $500,000 for the comparable 2000 period, reflecting higher pre-tax incomeand effective tax rates of 31.9% and 36.6%, respectively.  The decrease in the effective tax rateprimarily reflects the ancillary benefits from the aforementioned BOLIpurchase.

**Comparisonof Operating Results for the Nine Months Ended June 30, 2001 and 2000**

***             General.*** Net income for the nine months ended June 30, 2001 was $2.8 million ordiluted earnings per common share of $1.31, compared to net income of $2.4million or diluted earnings per common share of $1.15 for the nine months endedJune 30, 2000. The $407,000 increase in net income was attributable to a$972,000 increase in non-interest income, partially offset by a $327,000increase in non interest-expense, a $113,000 increase in income tax expense, a$80,000 increase in the provision for loan losses and a $45,000 decrease in netinterest income.

***             Net Interest Income. ***Net interest income for the nine months ended June 30,2001 was $10.4 million, a decrease of $45,000 from $10.5 million for the sameperiod in the prior year. The decrease reflects a decline in the averageinterest rate spread, partially offset by an increase in interest earningassets. The decline in the average interest rate spread is primarily a resultof an increase in the Company’s cost of funds and the extension of shorter-termborrowings to longer-term borrowings. The increase in net interest earningassets is primarily attributable to the investment proceeds from depositgrowth.  The Company’s average interest ratespread decreased to 2.26% for the nine months ended June 30, 2001 from 2.58%for the same period in the prior year, while the net interest margin decreasedto 2.66% for the 2001 nine month period from 2.82% a year earlier.

***             Interest Income.*** Interest and dividend income totaled$28.6 million for the nine months ended June 30, 2001, an increase of $1.8million compared to $26.8 million for the nine months ended June 30, 2000.  This increase reflects the effect of a $28.1million increase in total average interest-earning assets and an 6 basis pointincrease in the average yield on such assets to 7.27% for the nine months endedJune 30, 2001 from 7.21% for the same period in the prior year. Net interestincome in the current period was also negatively affected by the BOLIinvestment, as interest earning assets were used to fund the BOLI. BOLI incomeis included in non-interest income.

             Interestincome on loans increased $1.8 million for the nine months ended June 30, 2001compared to the same period in the prior year, reflecting the effect of a $24.3million increase in the average balance and a 17 basis point increase in theaverage yield. The increases in the average balance of loans and average yieldwas primarily attributable to an increase in multi-family and mixed-usecommercial real estate loans with higher yields.

             On a combinedbasis, interest and dividend income on mortgage-backed and other securitiesdecreased $234,000 to $6.8 million for the nine months ended June 30, 2001 from$7.0 million for the nine months ended June 30, 2000.  Interest on mortgage-backed securities decreased by $564,000,attributable to the effects of a $8.1 million decrease in the average balanceand a 23 basis point decrease in the average yield.  Interest on other securities increased by $330,000, primarilyattributable to a $6.3 million increase in the average balance, partiallyoffset by a 6 basis point decrease in the average yield.

             Interestand dividend income on other earning assets increased $194,000, primarilyattributable to a $5.7 million increase in the average balance, partiallyoffset by a 32 basis point decrease in the average yield.

***             Interest Expense***. Interest expense totaled $18.1 millionfor the nine months ended June 30, 2001 an increase of $1.8 million from theprior year’s nine months.  Interestexpense on deposits increased $2.4 million compared to the same period in theprior year, reflecting the effect of an $39.9 million increase in the averagebalance and a 51 basis point increase in the average rate on interest-bearingdeposits to 4.40% for the nine months ended June 30, 2001 from 3.89% for thenine months ended June 30, 2000.  Theincrease in average interest-bearing deposits consisted of a $27.2 millionincrease in average savings certificate accounts (to $204.0 million from $176.8million), a $10.5 million increase in average regular savings accounts (to$65.5 million from $55.0 million) and a $2.1 million increase in average NOW,club and money market accounts (to $64.4 million from $62.3 million).

             Interestexpense on borrowings decreased $604,000 to $7.1 million for the nine monthsended June 30, 2001 from $7.7 million for the nine months ended June 30, 2000.Total borrowings averaged $148.5 million for the nine months ended June 30,2001 at an average rate of 6.38% compared to $175.1 million and 5.87%,respectively, for the prior-year’s period. See “Liquidity and Capital Resources” for a further discussion of theCompany’s securities repurchase agreements.

***             Provision for Loan Losses***. The Company records provisions for loanlosses, which are charged to earnings, in order to maintain the allowance forloan losses at a level which is considered appropriate to absorb probablelosses inherent in the existing loan portfolio. The provision in each periodreflects management’s evaluation of the adequacy of the allowance for loanlosses.  Factors considered include thevolume and type of lending conducted, the Company’s previous loan lossexperience, the known and inherent risks in the loan portfolio, adversesituations that may affect the borrowers’ ability to repay, the estimated valueof any underlying collateral, and current economic conditions. The provisionfor loan losses was $225,000 and $145,000 for the nine months ended June 30,2001 and 2000, respectively. The higher provision in the nine month periodended June 30, 2001 primarily reflects an increase in multi-family andmixed-use commercial real estate loans, which present a higher risk.  Net loan charge-offs were $10,000 for thenine months ended June 30, 2001 compared to net charge-offs of $14,000 for thenine months ended June 30, 2000. See “Asset Quality” for a further discussionof the Company’s non-performing assets and allowance for loan losses.

***Non-Interest Income***. Non-interest income for the nine monthsended June 30, 2001 increased $972,000 to $2.1 million from $1.1 million forthe comparable period in 2000.  Theincrease primarily reflects a $325,000 increase in the net gain on sales ofreal estate mortgage loans held for sale, a $260,000 increase in the net gainon sales of securities, a $205,000 increase in other non-interest income, and a$181,000 increase in service charges and fee income.  The increase in the net gain on sale of real estate mortgageloans held for sale reflects mortgage loans sold of $29.5 million for the ninemonths ended June 30, 2001, as compared to loan sales of $9.1 million for theperiod ended June 30, 2000.  Theincrease in sales volume is consistent with management’s strategy to sell aportion of one–to-four family residential real estate originations in thesecondary market and supplement its portfolio with higher-yielding multi-familyand mixed-use commercial real estate loans.  The increase in the net gain on sales of securities, reflects sales of$5.0 million for the nine months ended June 30, 2001, as compared to sales of$185,000 for the period ended June 30, 2000. The increase in other non-interestincome primarily reflects income from the Company’s purchase of BOLI.  The increase in service charges and feeincome resulted primarily from increases in transaction volume.

***             Non-interest Expense***. Non-interest expense was $8.1 million for the nine months ended June 30,2001 an increase of $327,000 compared to the same period in the prioryear.  Increases in compensation andbenefits expense of $355,000, data processing service fees of $69,000 andoccupancy and equipment expense of $37,000, were partially offset by decreasesin other non-interest expense of $116,000 and federal deposit insurance costsof $18,000.  The increase incompensation and benefits expense primarily reflects an increase in the numberof employees and merit and performance-based increases for management and staffmembers.  The decrease in othernon-interest expense is primarily attributable to approximately $212,000 inproxy fight expenses reflected in the nine-month period ended June 30,2000.  The decrease in federal depositinsurance costs reflects a reduction in insurance rates.

***             Income Tax Expense***. Income tax expense for the nine monthsended June 30, 2001 was $1.5 million as compared to $1.4 million for the 2000period, reflecting higher pre-tax income and effective tax rates of 35.1% and37.0%, respectively. The decrease in the effective tax rate primarily reflectsthe ancillary benefits from the aforementioned BOLI purchase.

**Asset Quality**

             Non-performingloans totaled $209,000 at June 30, 2001, compared to  $123,000 at September 30, 2000 and $285,000 at June 30,2000.  The ratio of non-performing loansto total loans receivable was 0.05% at June 30, 2001, compared to 0.03% atSeptember 30, 2000 and 0.08% at June 30, 2000. The allowance for loan losseswas $1.9 million or 0.50% of total loans receivable at June 30, 2001, comparedto $1.7 million or 0.46% of total loans receivable at September 30, 2000 and$1.6 million or 0.45% at June 30, 2000. The ratio of the allowance for loanlosses to non-performing loans was 917.70% at June 30, 2001, compared to1384.55% at September 30, 2000 and 573.33% at June 30, 2000.

             The followingtable sets forth, certain asset quality ratios and other data at the datesindicated:

|                                             | **June 30,**                                    |   | **September 30,** |    | **June 30,** |   |
|--------------------------------------------------|-------------------------------------------------|--------|-------------------|---------|--------------|--------|
|                                             | **2001******                                    |   | **2000******      |    | **2000****** |   |
|                                             | **(Dollars in thousands)**                      |   |
|                                             |                                            |   |              |    |         |   |
| Non-accrual  loans past due ninety days or more: |                                            |   |              |    |         |   |
|                                             | Real estate  mortgage loans:                    |   |              |    |         |   |   |
|                                             | One- to  four-family                            | $      |              |    | $            | 109    |   | $ | 230 |   |
|                                             | Commercial                                      | 156    |              | --      |         | --     |   |
|                                             | Consumer loans                                  | 53     |              | 14      |         | 55     |   |
|                                             |                                            |        |              |         |         |        |   |
|                                             | Total                                           | 209    |              | 123     |         | 285    |   |
| Real estate  owned, net                          | --                                              |   | --                |    | --           |   |
|                                             |                                                 |   |                   |    |              |   |
| Total  non-performing assets                     | $                                               | 209    |              | $       | 123          |   | $ | 285 |   |
|                                             |                                                 |   |                   |    |              |   |
|                                             |                                            |   |              |    |         |   |
| Allowance for  loan losses                       | $                                               | 1,918  |              | $       | 1,703        |   | $ | 1,634 |   |
|                                             |                                                 |   |                   |    |              |   |
|                                             |                                            |   |              |    |         |   |
| Ratios:                                          |                                            |   |              |    |         |   |
|                                             | Non-performing  loans to total loans receivable | 0.05   | %            | 0.03    | %            | 0.08   | % |
|                                             | Non-performing  assets to total assets          | 0.04   |              | 0.02    |         | 0.05   |   |
|                                             | Allowance for  loan losses to:                  |   |              |    |         |   |   |
|                                             | Non-performing  loans                           | 917.70 |              | 1384.55 |         | 573.33 |   |
|                                             | Total loans  receivable                         | 0.50   |              | 0.46    |         | 0.45   |   |
|                                             |                                            |   |              |    |         |   |
|                                             |                                            |   |              |    |         |   |
| Total loans:                                     | 382,541                                         |   | 367,787           |    | 366,559      |   |
| Total assets:                                    | 550,057                                         |   | 522,874           |    | 523,055      |   |
|                                                  |                                                 |        |                   |         |              |        |  |  |  |  |  |  |  |

**Liquidity and Capital Resources**

             TheCompany’s primary sources of funds are deposits and borrowings; principal andinterest payments on loans and securities; and proceeds from sales of loans andsecurities.  While maturities andscheduled payments on loans and securities provide an indication of the timingof the receipt of funds, other sources of funds such as loan prepayments anddeposit inflows are less predictable due to the effects of changes in interestrates, economic conditions and competition.

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

             The primaryinvesting activities of the Company are the origination of real estate mortgageand other loans, and the purchase of mortgage-backed and other securities.  At June 30, 2001, the Company hadoutstanding loan origination commitments of $40.7 million, unadvanced homeequity lines of credit of $2.6 million and undisbursed construction loans inprocess of $5.5 million.  The Companyanticipates that it will have sufficient funds available to meet its currentloan origination and other commitments. At June 30, 2001, the Company had the ability to obtain additional FHLBadvances of approximately $74.2 million. Certificates of deposit scheduled to mature in one year or less fromJune 30, 2001 totaled $140.3 million. Based on the Company’s most recent experience and pricing strategy,management believes that a significant portion of such deposits will remainwith the Company.

             TheCompany’s borrowings at June 30, 2001 consisted of $68.0 million in borrowingsunder securities repurchase agreements and FHLB advances of $63.1 million. Inthe securities repurchase agreements, the Company borrows funds through thetransfer of debt securities to the FHLB of New York, as counterparty, andconcurrently agrees to repurchase the identical securities at a fixed price ona specified date.  The Company accountsfor these agreements as secured financing transactions since it maintainseffective control over the transferred securities.  Accordingly, the transaction proceeds are recorded as borrowingsand the underlying securities continue to be carried in the Company’s debtsecurities portfolio.  Repurchaseagreements are collateralized by the securities sold and, in certain cases, byadditional margin securities.  Duringthe nine months ended June 30, 2001, the average borrowings under theseagreements amounted to $76.4 million and the maximum month-end balanceoutstanding was $85.0 million

             Additionalinformation concerning outstanding repurchase agreements with the FHLB of NewYork as of June 30, 2001 is summarized as follows:

|                                  |                   |   | Accrued     |   | Weighted |   | Fair Value      |
|---------------------------------------|------------------------|--------|-------------|--------|----------|--------|-----------------|
|                                  |                   |   | Interest    |   | Average  |   | of  Collateral  |
| Remaining  Term to Final Maturity (1) | Amount                 |   | Payable (2) |   | Rate     |   | Securities  (3) |
|                                  | (Dollars in Thousands) |
|                                  |                   |   |        |   |     |   |            |
| Within 30 days                        | $                      | 1,500  |        | $      | 20       |   | 6.85            | % | $ | 1,504 |
| After 30 days  but within one year    |                   |   |        |   |     |   |            |
| After one but  within three years     | 11,000                 |   | 29          |   | 5.99     |   | 10,561          |
| After three  but within five years    | 10,100                 |   | 154         |   | 6.18     |   | 13,134          |
| After five  years                     | 45,412                 |   | 413         |   | 5.69     |   | 46,347          |
|                                  |                        |   |             |   |     |   |                 |
|                                  |                   |   |        |   |     |   |            |
|                                  | Total                  | $      | 68,012      |   | $        | 616    |            | 5.83 | % | $ | 71,546 |
|                                  |                        |   |             |   |     |   |                 |
|                                       |                        |        |             |        |          |        |                 |  |  |  |  |  |  |

 

(1) The weighted average remaining term to finalmaturity was approximately 6.3 years at June 30, 2001. Certain securitiesrepurchase agreements are callable by the FHLB of New York, prior to thematurity date.  The weighted averageremaining term to maturity, giving effect to earlier call dates, wasapproximately 2.0 years at June 30, 2001.(2) Included in other liabilities in the consolidated balance sheet.(3) Represents the fair value of the mortgage-backed securities ($47.0 million)and other debt securities ($24.5 million) which were transferred to thecounterparty, including accrued interest receivable of $731.000.  These securities consist ofavailable-for-sale securities and held-to-maturity securities with fair valuesof $64.7 million and $6.8 million, respectively.

             At June 30, 2001,the Company’s “amount at risk” under securities repurchase agreements wasapproximately $2.9 million.  This amountrepresents the excess of (i) the carrying amount, or market value if higher, ofthe securities transferred to the FHLB of New York plus accrued interestreceivable over (ii) the amount of the repurchase liability plus accruedinterest payable.

             Informationconcerning FHLB advances outstanding and weighted average interest rates withthe FHLB of New York are summarized as follows by remaining period of maturity:

|                               | **2001******           |    | **2000****** |   |
|------------------------------------|------------------------|---------|--------------|--------|
|                               | **Amount******         |    | **Rate****** |   | **Amount****** |   | **Rate****** |   |
|                               | (Dollars in thousands) |    |         |   |   |   |
|                               |                   |    |         |   |   |   |   |   |
| FHLB advances maturing:            |                   |    |         |   |   |   |   |   |
| Within 30 days                     | $—                |    |         | %      | $10,000 |   | 6.58 | % |
| After 30 days  but within one year | —                 |    |         |   | 15,000 |   | 6.72 |   |
| After one but within  three years  | 10,000                 |    | 6.54         |   | 6,000 |   | 6.48 |   |
| After three  but within five years | 34,000                 |    | 6.93         |   | 27,200 |   | 7.19 |   |
| After five  years                  | 19,120                 |    | 6.81         |   | 16,200 |   | 4.57 |   |
|                               |                        |    |         |   |  |   |   |   |
|                               |                   |    |         |   |   |   |   |   |
|                               | Total                  | $63,120 |         | 6.83   | % | $74,400 |   | 6.38 | % |
|                               |                        |    |         |   |  |   |   |   |
|                                    |                        |         |              |        |  |  |  |  |  |

             Theweighted average period to maturity date for the FHLB advances outstanding atJune 30, 2001 was 4.4 years, with a weighted average period to call of 4.2years. During the nine months ended June 30, 2001, the Company’s average FHLBadvances outstanding were $72.0 million, and the maximum month end balanceoutstanding was $83.4 million.

             AtJune 30, 2001 the Association exceeded all of its regulatory capitalrequirements with a tangible capital level of 6.79% of total adjusted assets,which is above the required level of 1.5%; core capital of 6.79% of totaladjusted assets, which is above the required level of 4.0%; and totalrisk-based capital of 14.4%, which is above the required level of 8.0%.  These regulatory capital requirements, whichare applicable to the Association only, do not consider additional capital heldat the Company level, and require certain adjustments to stockholder’s equityto arrive at the various capital amounts.

Part I. Item 3.

**Quantitative and Qualitative Disclosures About Market Risk**

             TheCompany’s most significant form of market risk is interest rate risk, as themajority of the Company’s assets and liabilities are sensitive to changes ininterest rates.  Other types of marketrisk, such as foreign exchange risk and commodity price risk, do not arise inthe normal course of the Company’s business activities.

             Managementis responsible for monitoring and limiting the Company’s exposure to interestrate risk within established guidelines while maximizing net interestincome.  The Company will continue tomonitor its interest rate sensitivity with the primary objective to prudentlystructure the balance sheet so that movements of interest rates on assets andliabilities are highly correlated and produce a reasonable net interest margineven in periods of volatile interest rates. Further discussion on market risk is in the Company’s Form 10-K for theyear ended September 30, 2000.

             Duringthe quarter ended June 30, 2001, there were no significant changes in theCompany’s assessment of market risk.

**PART II. OTHER INFORMATION**

**Item 1.  Legal Proceedings**

             TheCompany is involved as plaintiff or defendant in various legal proceedingsarising in the normal course of its business. While the ultimate outcome of these various legal proceedings cannot bepredicted with certainty, it is the opinion of management that the resolutionof these legal actions should not have a material effect on the Company’sfinancial position, results of operations or liquidity.

**Item 2.  Changes in Securities**

             None

**Item3.  Defaults Upon Senior Securities**

             None

**Item 4.  Submission ofMatters to a Vote of Security Holders**

             None

 

**Item 5.  Other Information**

             None

**Item6.  Exhibits and Reports on Form 8-K**

|   | (a)  Exhibits |                    |
|--------|--------------------|-------------------------|
|   | Exhibit No.        | Name                    |
|   | 27                 | Financial Data Schedule |

 

(b)  Reports on Form 8-K

During the quarter ended June 30, 2001 , the Companyfile one report on form 8-K.

On April 23, 2001, under Item 5, the Company issued apress release in conjunction with first quarter earnings and dividenddeclaration.

**SIGNATURES**

             Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 

|                         | **YONKERS FINANCIAL CORPORATION****** |
|------------------------------|---------------------------------------|
|                         | (Registrant)                          |
|                         |                                  |
| Date:  August  13, 2001 | /s/  Richard  F. Komosinski      |
|                         | Richard F. Komosinski,                |
|                         | President and Chief Executive Officer |
|                         | (Principal Executive Officer)         |
|                         |                                  |
| Date:  August  13, 2001 | /s/ Joseph D. Roberto                 |
|                         | Joseph D. Roberto                     |
|                         | Senior Vice President, Treasurer and  |
|                         | Chief Financial Officer               |
|                         | (Principal Financial Officer)         |