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

                                    FORM 10-Q

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

                  For the quarterly period ended March 31, 1999

                                       or

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

                    For the transition period from     to    
                                                  ----   ----  

                         Commission File Number 0-27650

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

          DELAWARE                                               14-1788465
-------------------------------                               ----------------
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)


                   341 MAIN STREET, CATSKILL, NY           12414
             -----------------------------------------------------
             (Address of principal executive offices)   (Zip Code)

                                  (518)943-3600
              (Registrant's telephone number, including area code)


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

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

Common Shares, $.01 par value                              4,360,334
-----------------------------                           ---------------
      (Title of class)                           (outstanding at April 30, 1999)
<PAGE>
                         CATSKILL FINANCIAL CORPORATION
                                    FORM 10-Q
                                 March 31, 1999
INDEX
PART I   FINANCIAL INFORMATION                                              Page
Item 1.  Consolidated Interim Financial Statements                          
         Consolidated Statements of Financial Condition as of               
         March 31, 1999 (Unaudited) and September 30, 1998..............      1
         Consolidated Statements of Income for the three months and six     
         months ended March 31, 1999 and 1998 (Unaudited)...............      2
         Consolidated Statements of Changes in Shareholders' Equity         
         for the six months ended March 31, 1999 and 1998                   
         (Unaudited)....................................................      3
         Consolidated Statements of Cash Flows for the six months           
         ended March 31, 1999 and 1998 (Unaudited)......................      4
         Notes to Unaudited Consolidated Interim Financial Statements...      5
Item 2.  Management's Discussion and Analysis of Financial Condition        
         and Results of Operations......................................      7
Item 3.  Quantitative and Qualitative Disclosures about Market Risk.....     20

PART II. OTHER INFORMATION                                                  
                                                                            
Item 1.  Legal Proceedings..............................................     23
Item 2.  Changes in Securities..........................................     23
Item 3.  Default on Senior Securities...................................     23
Item 4.  Submission of Matters to a Vote of Security Holders............     23
Item 5.  Other Information..............................................     24
Item 6.  Exhibits and Reports on Form 8-K...............................     24
                                                                            
         Signatures.....................................................     25
<PAGE>

                         CATSKILL FINANCIAL CORPORATION
                 Consolidated Statements of Financial Condition          
                        (In thousands, except share data)                
                                                                         
<TABLE>
<CAPTION>
                            Assets                    March 31, 1999     September 30, 1998
                            ------                    --------------     ------------------
                                                                         
                                   (Unaudited)                           
<S>                                                     <C>                 <C>      
Cash and due from banks                                 $   2,754           $   2,795
Securities available for sale, at fair value              159,468             164,983
Investment securities, at amortized cost:                                
     (Estimated fair value of $2,106 at                                  
         September 30, 1998)                                   --               2,060
Stock in Federal Home Loan Bank of NY, at cost              1,986               1,954
Loans receivable, net                                     143,236             137,785
Corporate owned life insurance                             10,123                  --
Accrued interest receivable                                 2,437               2,398
Premises and equipment, net                                 2,592               2,522
Real estate owned                                              45                  53
Other assets                                                  235                 202
                                                        ---------           ---------
         Total Assets                                   $ 322,876           $ 314,752
                                                        =========           =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                            Assets                    March 31, 1999     September 30, 1998
                            ------                    --------------     ------------------
                                                                         
                                   (Unaudited)                           
<S>                                                     <C>                 <C>      
          Liabilities and Shareholders' Equity                           
Liabilities:                                                             
   Deposits:                                                             
     Non-interest bearing                               $   7,722           $   6,009
     Interest bearing                                     209,388             203,968
                                                        ---------           ---------
          Total Deposits                                  217,110             209,977
   Short-term borrowings                                    6,900               6,840
   Long-term borrowings                                    25,000              25,000
   Advance payments by borrowers for taxes and                           
         insurance                                          1,489                 673
   Accrued interest payable                                   278                 288
   Official bank checks                                     1,472               1,986
   Accrued expenses and other liabilities                   2,012               2,157
                                                        ---------           ---------
          Total Liabilities                             $ 254,261           $ 246,921
                                                        ---------           ---------
Shareholders' Equity                                                     
   Preferred stock, $.01 par value; authorized                           
    5,000,000 shares                                           --                  --
   Common stock, $.01 par value; authorized                              
    15,000,000 shares; 5,686,750 shares issued                           
    at March 31, 1999 and September 30, 1998                   57                  57
   Additional paid-in capital                              55,022              54,974
   Retained earnings, substantially restricted             38,656              37,374
   Common stock acquired by ESOP                           (3,867)             (3,981)
   Unearned management recognition plan (MRP)              (1,202)             (1,433)
   Treasury stock, at cost (1,326,416 shares at                          
     March 31, 1999 and 1,328,416 shares at                              
         September 30, 1998)                              (21,191)            (21,223)
   Accumulated other comprehensive income                   1,140               2,063
                                                        ---------           ---------
         Total Shareholders' Equity                        68,615              67,831
                                                        ---------           ---------
         Total Liabilities and Shareholders' Equity     $ 322,876           $ 314,752
                                                        =========           =========
</TABLE>
 See accompanying notes to unaudited consolidated interim financial statements.
<PAGE>
                         CATSKILL FINANCIAL CORPORATION
                        Consolidated Statements of Income
                 (In thousands, except share and per share data)
<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED               SIX MONTHS ENDED
                                                          March 31,                        March 31,
                                                    1999             1998            1999            1998
                                                 -----------     -----------      -----------     ----------- 
                                                        (Unaudited)                        (Unaudited)
<S>                                              <C>             <C>              <C>             <C>         
Interest and dividend income:
     Loans                                       $     2,778     $     2,541      $     5,542     $     5,099 
     Securities available for sale
         Taxable                                       1,919           2,420            3,949           4,919
         Non-taxable                                     537             169            1,028             229
     Investment securities held to maturity               10              56               43             177
     Federal funds sold and other                          3               3                4               4
     Stock in Federal Home Loan Bank of NY                32              34               67              65
                                                 -----------     -----------      -----------     ----------- 
          Total interest and dividend income           5,279           5,223           10,633          10,493

Interest expense:
     Deposits                                          2,118           2,188            4,344           4,429
     Short-term borrowings                               108             144              180             328
     Long-term borrowings                                322              58              651              58
                                                 -----------     -----------      -----------     ----------- 
          Total interest expense                       2,548           2,390            5,175           4,815
                                                 -----------     -----------      -----------     ----------- 
Net interest income                                    2,731           2,833            5,458           5,678

Provision for loan losses                                 45              45               90              99
                                                 -----------     -----------      -----------     ----------- 
     Net interest income after provision for
         loan losses                                   2,686           2,788            5,368           5,579
                                                 -----------     -----------      -----------     ----------- 
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED               SIX MONTHS ENDED
                                                          March 31,                        March 31,
                                                    1999             1998            1999            1998
                                                 -----------     -----------      -----------     ----------- 
                                                        (Unaudited)                        (Unaudited)
<S>                                              <C>             <C>              <C>             <C>         
Noninterest income:
     Corporate-owned life insurance                      120             ---              123             ---
     Service fees on deposit accounts                     89              66              178             134
     Net securities gains                                ---              33               22              52
     Other income                                         45              34               88              59
                                                 -----------     -----------      -----------     ----------- 
          Total noninterest income                       254             133              411             245
                                                 -----------     -----------      -----------     ----------- 
Noninterest expense:
     Salaries and employee benefits                      881             838            1,752           1,678
     Advertising and business promotion                   36              39               58              89
     Net occupancy on premises                            98              89              193             171
     Federal deposit insurance premiums                    6               7               13              14
     Postage and supplies                                 91              82              159             146
     Outside data processing fees                        146             113              267             224
     Equipment                                            35              43               75              83
     Professional fees                                    82              67              141             104
     Real estate operations, net                          19             (43)              33             (59)
     Other                                               148             159              316             292
                                                 -----------     -----------      -----------     ----------- 
          Total noninterest expense                    1,542           1,394            3,007           2,742
                                                 -----------     -----------      -----------     ----------- 
          Income before taxes                          1,398           1,527            2,772           3,082
Income tax expense                                       357             555              750           1,152
                                                 -----------     -----------      -----------     ----------- 
          Net income                             $     1,041     $       972      $     2,022     $     1,930
                                                 ===========     ===========      ===========     =========== 
Basic earnings per common share                  $       .27     $       .23      $       .53     $       .46
Diluted earnings per common share                $       .27     $       .23      $       .52     $       .45

Weighted Average Common Shares-Basic               3,850,029       4,165,075        3,844,594       4,208,213
Weighted Average Common Shares-Diluted             3,916,756       4,294,100        3,898,120       4,336,377
</TABLE>
 See accompanying notes to unaudited consolidated interim financial statements.

<PAGE>
                         CATSKILL FINANCIAL CORPORATION
           Consolidated Statements of Changes in Shareholders' Equity
           (In thousands, except share and per share data) (Unaudited)
<TABLE>
<CAPTION>
                                                                                Retained        Common            
                                                                 Additional    Earnings,         Stock         
                                                     Common       Paid-in    Substantially    Acquired by      
                                                     Stock        Capital      Restricted        ESOP          
                                                     -----        -------      ----------        ----          
<S>                                                  <C>            <C>            <C>           <C>           
Balance at September 30, 1998                        $ 57           $54,974        $37,374       $(3,981)      
Comprehensive income:
         Net income                                                                  2,022                     
         Other comprehensive income, net of tax:
           Unrealized net losses arising during the
            period on AFS securities (Pre-tax $1,516)                                                          
           Reclassification adjustment for gains
            realized in net income (pre-tax $22)                                                               
                                                                                                               
         Other comprehensive income                                                                            
                                                                                                               
Comprehensive income                                                                                           
                                                                                                               
Allocation of ESOP stock (11,386 shares)                                 48                           114      
Dividends paid on common stock ($.185 per share)                                     (733)                     
Exercise of stock options (2,000 shares issued)                                        (7)                     
Amortization of unearned MRP compensation                                                                      
                                                     ----           -------        -------       --------      
Balance at March 31, 1999                            $ 57           $55,022        $38,656       $(3,867)      
                                                     ====           =======        =======       ========      

Balance at September 30, 1997                        $ 57           $54,811        $34,915       $(4,209)      
Comprehensive income:
         Net income                                                                  1,930                     
         Other comprehensive income, net of tax:
            Unrealized net gains arising during the
               period on AFS securities (Pre-tax $188)                                                         
            Reclassification adjustment for gains
               realized in net income (pre-tax $52)                                                            
                                                                                                               
         Other comprehensive income                                                                            
                                                                                                               
Comprehensive income                                                                                           
                                                                                                               
Allocation of ESOP stock (11,363 shares)                                 89                           114      
Dividends paid on common stock ($.16 per share)                                      (699)                     
Purchase of common stock (236,675 shares)                                                                      
Exercise of stock options
(4,401 shares issued, net)                                                            (29)                     
Amortization of unearned MRP compensation                                                                      
                                                     ----           -------        -------       --------      
Balance at March 31, 1998                            $ 57           $54,900        $36,117       $(4,095)      
                                                     ====           =======        =======       ========      
</TABLE>
See accompanying notes to unaudited consolidated interim financial statements.
<PAGE>
<TABLE>
<CAPTION>
                                                        Unearned                 Accumulated
                                                        Management   Treasury         Other
                                                        Recognition    Stock,     Comprehensive   Comprehensive
                                                           Plan       at Cost        Income           Income        Total
                                                           ----       -------        ------           ------        -----
<S>                                                     <C>        <C>                <C>           <C>           <C>    
Balance at September 30, 1998                           $(1,433)   $(21,223)          $ 2,063                     $67,831

Comprehensive income:
         Net income                                                                                 $    2,022      2,022
         Other comprehensive income, net of tax:
           Unrealized net losses arising during the
            period on AFS securities (Pre-tax $1,516)                                                    (910)
           Reclassification adjustment for gains
            realized in net income (pre-tax $22)                                                          (13)
                                                                                                   -----------
         Other comprehensive income                                                     (923)            (923)      (923)
                                                                                                    ----------           
Comprehensive income                                                                                $    1,099
                                                                                                    ==========
Allocation of ESOP stock (11,386 shares)                                                                              162
Dividends paid on common stock ($.185 per share)                                                                    (733)
Exercise of stock options (2,000 shares issued)                           32                                           25
Amortization of unearned MRP compensation                   231                                                       231
                                                        --------   ---------          -------                     -------
Balance at March 31, 1999                               $(1,202)   $(21,191)          $ 1,140                     $68,615
                                                        ========   =========          =======                     =======

Balance at September 30, 1997                           $(1,856)   $(12,862)            $ 921                     $71,777
Comprehensive income:
         Net income                                                                                $     1,930      1,930
         Other comprehensive income, net of tax:
            Unrealized net gains arising during the
               period on AFS securities (Pre-tax $188                                                      113
            Reclassification adjustment for gains
               realized in net income (pre-tax $52)                                                       (31)
                                                                                                    ----------
         Other comprehensive income                                                        82               82         82
                                                                                                    ----------           
Comprehensive income                                                                                 $   2,012
                                                                                                     =========
Allocation of ESOP stock (11,363 shares)                                                                              203
Dividends paid on common stock ($.16 per share)                                                                     (699)
Purchase of common stock (236,675 shares)                            (4,242)                                      (4,242)
Exercise of stock options
(4,401 shares issued, net)                                                67                                           38
Amortization of unearned MRP compensation                    228                                                      228
                                                        --------   ---------          -------                     -------
Balance at March 31, 1998                               $(1,628)   $(17,037)       $    1,003                     $69,317
                                                        ========   =========       ==========                     =======
</TABLE>
 See accompanying notes to unaudited consolidated interim financial statements.
<PAGE>

                         CATSKILL FINANCIAL CORPORATION
                      Consolidated Statements of Cash Flows
                                 (In Thousands)
<TABLE>
<CAPTION>
                                                                                 Six Months Ended
                                                                                     March 31,
                                                                               1999              1998
                                                                             -------           --------
CASH FLOWS FROM OPERATING ACTIVITIES:                                               (Unaudited)
<S>                                                                          <C>                <C>    
 Net Income                                                                  $ 2,022            $ 1,930
Adjustments to reconcile net income to net cash provided by
    operating activities:
  Depreciation                                                                   103                105
  Net accretion on securities                                                    (55)               (22)
  Provision for loan losses                                                       90                 99
  MRP compensation expense                                                       231                228
  ESOP compensation expense                                                      162                203
  Increase in cash surrender values on COLI                                     (123)                 -
  Losses (gains) on sale of real estate owned                                     13                (68)
  Write-down on real estate owned                                                 17                  -
  Gains on sales and calls of securities                                         (22)               (52)
  Net increase (decrease) in other assets                                        (72)                17
  Net decrease in accrued expense and other liabilities                          (54)            (1,963)
                                                                             -------            -------
 Net cash provided by operating activities                                     2,312                477
                                                                             -------            -------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                 Six Months Ended
                                                                                     March 31,
                                                                               1999              1998
                                                                             -------           --------
CASH FLOWS FROM OPERATING ACTIVITIES:                                               (Unaudited)
<S>                                                                          <C>                <C>    
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturity/calls/paydown of investment securities                  2,065              5,007
Net increase in loans                                                         (5,573)            (1,658)
Capital expenditures, net                                                       (173)              (143)
Purchase of corporate-owned life insurance                                   (10,000)                 -
Purchase of Federal Home Loan Bank stock                                         (32)              (192)
Purchase of AFS securities                                                   (25,645)           (42,530)
Proceeds from sale of securities available for sale                            5,394             12,160
Proceeds from maturity/calls/paydown of AFS securities                        24,300             21,110
Proceeds from sale of real estate owned                                           10                340
                                                                             -------            -------
Net cash used by investing activities                                         (9,654)            (5,906)
                                                                             -------            -------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from the exercise of stock options                                   25                 38
Net increase in deposits                                                       7,133              2,903
Net increase in advances from borrowers for
 taxes and insurance                                                             816              1,243
Net increase in short-term borrowings                                             60              1,535
Increase in long-term borrowings                                                   -              5,000
Cash dividends on common stock                                                  (733)              (699)
Purchase of common stock for treasury                                              -             (4,242)
                                                                             -------            -------
Net cash provided by financing activities                                      7,301              5,778
                                                                             -------            -------
Net (decrease) increase in cash and cash equivalents                             (41)               349
Cash and cash equivalents at beginning of period                               2,795              2,274
                                                                             -------            -------
Cash and cash equivalents at end of period                                   $ 2,754            $ 2,623
                                                                             =======            =======
Supplemental  disclosures of cash flow information: 
 Cash paid during the period for:
   Interest                                                                  $ 5,185            $ 4,748
   Taxes                                                                         489                661
Transfer of loans to real estate owned                                            32                252
Change in net unrealized gain (loss) on AFS securities, net of deferred
tax expense (benefit) of $(615) and $55, respectively                           (923)                82
</TABLE>
  See accompanying notes to unaudited consolidated interim financial statements

<PAGE>



                         CATSKILL FINANCIAL CORPORATION
                         Notes to Unaudited Consolidated
                          Interim Financial Statements

Note 1. Basis of Presentation

     The  unaudited   consolidated  interim  financial  statements  include  the
     accounts of Catskill  Financial  Corporation (the "Company") and its wholly
     owned  subsidiary,  Catskill  Savings Bank (the "Bank").  All  intercompany
     accounts and transactions have been eliminated in consolidation. Amounts in
     prior periods'  unaudited  consolidated  interim  financial  statements are
     reclassified   whenever  necessary  to  conform  to  the  current  period's
     presentation.  In management's opinion, the unaudited  consolidated interim
     financial  statements reflect all adjustments of a normal recurring nature,
     and disclosures  which are necessary for a fair presentation of the results
     for the interim  periods  presented and should be read in conjunction  with
     the  consolidated  financial  statements  and related notes included in the
     Company's 1998 Annual Report to Stockholders. The results of operations for
     the  interim  periods  are not  necessarily  indicative  of the  results of
     operations  to be expected  for the full fiscal  year ended  September  30,
     1999.

Note 2. Earnings Per Share

     Basic  earnings  per share  excludes  dilution  and is computed by dividing
     income  available to common  stockholders by the weighted average number of
     common shares outstanding for the period.  Unvested restricted stock is not
     considered  outstanding  and  only  included  in the  computation  of basic
     earnings per share on the date they are fully vested.  Diluted earnings per
     share  reflects the  potential  dilution  that could occur if securities or
     other  contracts  to issue common  stock were  exercised or converted  into
     common  stock or resulted in the  issuance of common stock that then shared
     in the  earnings of the entity,  such as the  Company's  stock  options and
     unvested restricted stock.  Unallocated ESOP shares are not included in the
     weighted  average number of common shares  outstanding for either the basic
     or diluted earnings per share calculations.

     The following sets forth certain  information  regarding the calculation of
     basic and  diluted  earnings  per  share for the three  month and six month
     periods ended March 31:
<PAGE>
                 (in thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                        Three Months Ended                  Six Months Ended
                                                             March 31                           March 31
                                                           -------------                     -------------   
                                                      1999              1998             1999              1998
                                                   -------------     -------------     -------------     ------------
<S>                                                <C>               <C>               <C>               <C>         
Net income                                         $       1,041     $         972     $       2,022     $      1,930
                                                   =============     =============     =============     ============

Weighted average common shares                         3,850,029         4,165,075         3,844,594        4,208,213
Dilutive effect of potential common shares
         related to stock compensation plans              66,727           129,025            53,526          128,124
                                                   -------------     -------------     -------------     ------------
Weighted average common shares including
         potential dilution                            3,916,756         4,294,100         3,898,120        4,336,337
                                                   =============     =============     =============     ============

Basic earnings per share                                   $ .27             $ .23             $ .53            $ .46
Diluted earnings per share                                 $ .27             $ .23             $ .52            $ .45
</TABLE>
<PAGE>
Note 3. Comprehensive Income

     On October 1, 1998,  the Company  adopted the  provisions  of  Statement of
     Financial  Accounting  Standards (SFAS) No. 130,  "Reporting  Comprehensive
     Income." This Statement establishes standards for the reporting and display
     of comprehensive  income and its components.  Comprehensive income includes
     the  reported  net  income  of the  Company  adjusted  for  items  that are
     currently  accounted for as direct  entries to equity,  such as the mark to
     market adjustment on securities  available for sale, foreign currency items
     and minimum pension liability  adjustments.  At the Company,  comprehensive
     income  represents  net  income  plus  other  comprehensive  income,  which
     consists  of the net  change in  unrealized  gains or losses on  securities
     available for sale for the period.  Accumulated other comprehensive  income
     represents the net unrealized  gains or losses on securities  available for
     sale as of the balance sheet dates.  Comprehensive income for the six month
     period  ended  March  31,  1999  and 1998 was  $1,099,000  and  $2,012,000,
     respectively.

Note 4. Impact of New Accounting Standards

     In June 1997, the Financial  Accounting  Standards  Board  ("FASB")  issued
     Statement  of Financial  Accounting  Standard  No. 131,  "Disclosure  about
     Segments of an Enterprise and Related  Information"  ("SFAS No. 131"). SFAS
     No. 131  establishes  standards  for  reporting by public  companies  about
     operating  segments  of  their  business.  SFAS No.  131  also  establishes
     standards for related  disclosures about products and services,  geographic
     areas and major  customers.  The  Company's  operations  are  solely in the
     financial services industry and include traditional  banking services.  The
     Company  operates  solely in the  geographical  region of upstate New York.
     Management makes operating  decisions and assesses  performance based on an
     ongoing review of its traditional banking operations,  which constitute the
     Company's  only  reportable  segment  under  SFAS No.  131.  Based on these
     factors, no additional disclosures are expected to be required.

     In February 1998, FASB issued SFAS No. 132,  "Employers'  Disclosures about
     Pensions and Other  Postretirement  Benefits,"  which amends the disclosure
     requirements of SFAS No. 87, "Employers' Accounting for Pensions," SFAS No.
     88,  "Employers'  Accounting for  Settlements  and  Curtailments of Defined
     Benefit  Pension  Plans and for  Termination  Benefits,"  and SFAS No. 106,
     "Employers'  Accounting for  Postretirement  Benefits Other Than Pensions."
     SFAS No. 132  standardizes  the disclosure  requirements of SFAS No. 87 and
     No. 106 to the extent  practicable  and  recommends  a parallel  format for
     presenting  information about pensions and other postretirements  benefits.
     The  Statement  does  not  change  any of the  measurement  or  recognition
     provisions  provided for in SFAS No. 87, No. 88, or No. 106. The  Statement
     is effective for fiscal years beginning after December 15, 1997. Management
     anticipates  providing the required  disclosures in the September 30, 1999,
     consolidated  financial  statements.   This  Statement  imposes  disclosure
     requirements  only and is not  expected  to have a  material  effect on the
     financial condition or results of operations of the Company.

     In June  1998,  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
     Instruments  and Hedging  Activities,"  which  establishes  accounting  and
     reporting   standards  for  derivative   instruments,   including   certain
     derivative  instruments  embedded  in  other  contracts,  and  for  hedging
     activities.  This Statement is effective for all fiscal  quarters of fiscal
     years beginning after June 15, 1999. Management is currently evaluating the
     impact  of  this   Statement  on  the  Company's   consolidated   financial
     statements.
<PAGE>
                         CATSKILL FINANCIAL CORPORATION
                                    FORM 10-Q
                                 March 31, 1999

                   PART I - FINANCIAL INFORMATION (continued)

Item 2.            Management's Discussion and Analysis of Financial Condition
                   and Results of Operations

GENERAL

Catskill  Financial  Corporation  (the  "Company" or "Catskill  Financial")  was
formed in December  1995 to acquire all of the common stock of Catskill  Savings
Bank (the  "Bank")  upon its  conversion  from a mutual  savings bank to a stock
savings bank. On April 18, 1996, the Company  completed its initial public stock
offering,  issuing 5,686,750 shares of $.01 par value common stock at $10.00 per
share.  Net proceeds to the Company were $54.9 million after  conversion  costs,
and $50.4 million excluding the shares acquired by the Company's  Employee Stock
Ownership  Plan (the "ESOP"),  which were  purchased with the proceeds of a loan
from the Company.

The consolidated  financial  condition and operating  results of the Company are
primarily  dependent  upon  its  wholly  owned  subsidiary,  the  Bank,  and all
references  to the  Company  prior to April 18,  1996,  except  where  otherwise
indicated, are to the Bank.

The Bank has been and continues to be a community oriented financial institution
offering a variety of financial  services.  The Bank attracts  deposits from the
general public and uses such deposits,  together with other funds,  to originate
one to four family  residential  mortgages,  and, to a lesser  extent,  consumer
(including  home equity  lines of credit),  commercial,  and  multi-family  real
estate and other loans in its primary  market area.  The Bank's  primary  market
area is comprised of Greene County and southern Albany County in New York, which
are serviced  through five banking  offices,  the most recent  having  opened in
April 1998. The Bank's  deposit  accounts are insured by the Bank Insurance Fund
("BIF") of the Federal Deposit Insurance Corporation ("FDIC"), and, as a federal
savings  bank,  the Bank is  subject  to  regulation  by the  Office  of  Thrift
Supervision ("OTS").

The Bank's profitability,  like many financial  institutions,  is dependent to a
large extent upon its net interest income,  which is the difference  between the
interest it receives on interest earning assets,  such as loans and investments,
and the interest it pays on interest bearing liabilities, principally deposits.

Results of operations are also affected by the Bank's provision for loan losses,
non-interest  expenses  such as salaries and employee  benefits,  occupancy  and
other  operating  expenses and to a lesser extent,  non-interest  income such as
service charges on deposit accounts.

Financial  institutions  in general,  including the Company,  are  significantly
affected  by  economic  conditions,  competition  and the  monetary  and  fiscal
policies of the federal  government.  Lending  activities  are influenced by the
demand for and supply of  housing,  competition  among  lenders,  interest  rate
conditions  and  funds  availability.  Deposit  balances  and cost of funds  are
influenced  by  prevailing  market  rates  on  competing  investments,  customer
preference  and the levels of personal  income and savings in the Bank's primary
market area.
<PAGE>
FORWARD-LOOKING STATEMENTS

         When used in this Form 10-Q or future  filings by the Company  with the
Securities  and Exchange  Commission,  in the Company's  press releases or other
public  or  shareholder  communications,  or in oral  statements  made  with the
approval of an authorized  executive officer,  the words or phrases "will likely
result",  "are expected to",  "will  continue",  "is  anticipated",  "estimate",
"project",   "believe",   or  similar   expressions  are  intended  to  identify
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigations Reform Act of 1995. In addition, certain disclosures and information
customarily provided by financial institutions, such as analysis of the adequacy
of the allowance for loan losses or an analysis of the interest rate sensitivity
of the Company's assets and  liabilities,  are inherently based upon predictions
of future events and circumstances.  Furthermore, from time to time, the Company
may  publish  other  forward-looking  statements  relating  to such  matters  as
anticipated financial performance, business prospects, and similar matters.

         The Private  Securities  Litigation  Reform Act of 1995 provides a safe
harbor for forward-looking  statements. In order to comply with the terms of the
safe  harbor,  the  Company  notes  that a variety of  factors  could  cause the
Company's   actual  results  and  experience  to  differ   materially  from  the
anticipated   results  or  other   expectations   expressed  in  the   Company's
forward-looking  statements. Some of the risks and uncertainties that may affect
the operations, performance,  development and results of the Company's business,
the interest rate sensitivity of its assets and liabilities, and the adequacy of
its allowance for loan losses, include but are not limited to the following:

o        Deterioration   in  local,   regional,   national  or  global  economic
         conditions  which could result,  among other things,  in an increase in
         loan  delinquencies,  a decrease in property values, or a change in the
         housing turnover rate;

o        the effect of certain  customers  and  vendors of  critical  systems or
         services failing to adequately address issues relating to becoming Year
         2000 compliant;

o        changes  in  market  interest  rates or  changes  in the speed at which
         market interest rates change;

o        changes  in  laws  and  regulations  affecting  the  financial  service
         industry;

o        changes in competition; and

o        changes in consumer preferences.

         The Company  wishes to caution  readers not to place undue  reliance on
any  forward-looking  statements,  which speak only as of the date made,  and to
advise readers that various  factors,  including  those described  above,  could
affect the Company's financial  performance and could cause the Company's actual
results or  circumstances  for future  periods to differ  materially  from those
anticipated or projected.

         The  Company  does  not  undertake,   and  specifically  disclaims  any
obligation, to publicly release any revisions to any forward-looking  statements
to  reflect  the   occurrence  of  anticipated   or   unanticipated   events  or
circumstances after the date of such statements.
 <PAGE>
FINANCIAL CONDITION

Total assets were $322.9 million at March 31, 1999, an increase of $8.1 million,
or 2.6% from the $314.8  million at September  30, 1998.  The increase in assets
was primarily in corporate owned life insurance,  and to a lesser extent,  loans
and was  funded  principally  by  increases  in  deposits  and  prepayments  and
maturities from the Company's security portfolio.

Cash and cash  equivalents  were $2.8 million at March 31, 1999,  unchanged from
September 30, 1998.

Total  securities,  which  include  securities  held  to  maturity  ("HTM")  and
securities  available for sale ("AFS"),  excluding Federal Home Loan Bank stock,
were $159.5 million, a decrease of $7.5 million, or 4.5% from the $167.0 million
as of September 30, 1998.  The decrease in  securities  was  principally  in the
Company's  mortgage-backed  securities ("MBS") portfolio,  as the lower interest
rate environment  accelerated the rate of prepayments on the Company's  existing
MBS  portfolio.  The  Company  used most of the  proceeds  to fund a $10 million
purchase of corporate owned life insurance  ("COLI") as a financing  vehicle for
pre- and post retirement  employee  benefits.  The COLI's investment returns and
death  benefits are not taxable to the Company,  and the insurance  premiums are
non-deductible. The insurance policy provides that the initial lump sum premium,
after certain deductions,  is maintained in a separate account,  which minimizes
the  Company's  exposure  to the  insurance  carrier  credit risk and allows the
Company to select  both the  investment  manager  and the  investment  portfolio
strategy.

Loans  receivable  were $145.3 million as of March 31, 1999, an increase of $5.6
million or 4.0% over the $139.7  million at September  30, 1998.  The  following
table shows the loan portfolio  composition  as of the respective  balance sheet
dates:
<PAGE>
<TABLE>
<CAPTION>
                                                                    March 31,                                 September 30,
                                                                      1999                                        1998
                                                      ----------------------------------          ----------------------------------
                                                      (In thousands)          % of Loans          (In thousands)          % of Loans
<S>                                                      <C>                      <C>                <C>                      <C>  
Real Estate Loans
    One-to-four family                                   $ 117,361                80.7%              $ 113,423                81.0%
    Multi-family and commercial                              7,134                 4.9                   6,389                 4.6
    Construction                                             2,385                 1.6                   1,182                 0.8
                                                       ------------             ------             -----------              ------
        Total real estate loans                            126,880                87.2                 120,994                86.4
Consumer Loans                                              17,877                12.3                  18,399                13.2
Commercial Loans                                               686                 0.5                     602                 0.4
                                                       -----------              ------             -----------              ------
        Gross Loans                                        145,443               100.0%                139,995               100.0%
                                                                                 =====                                       =====
Less:  Net deferred loan fees                                 (177)                                       (260)
                                                       -----------                                 -----------
        Total loans receivable                           $ 145,266                                   $ 139,735
                                                         =========                                   =========
</TABLE>
One-to-four  family real estate loans  increased  $3.9 million,  or 3.5%, as the
Company has  continued to promote a 15 year fixed rate  mortgage  product with a
preferred  rate for  borrowers  who have their  monthly  payments  automatically
deducted from a checking account with the Bank. The increase in multi-family and
commercial real estate loans was principally  represented by a loan to finance a
mobile home park in the Company's primary market area. Construction loans are up
due to several commercial  projects under development as well as seasonal one to
four  family   residential   construction,   with  the  Company  providing  both
construction and permanent financing.
<PAGE>
Non-performing  assets at March 31, 1999 were $797,000, or .25% of total assets,
compared to the  $644,000,  or .20% of total assets at September  30, 1998.  The
table   below  sets  forth  the  amounts  and   categories   of  the   Company's
non-performing assets.
<TABLE>
<CAPTION>
                                                                  March 31,                  September 30,
                                                                    1999                        1998
                                                                            (In thousands)
<S>                                                               <C>                          <C>    
Non-performing loans:
    One-to-four family                                            $   594                      $   520
    Multi-family and commercial                                       ---                          ---
    Consumer                                                          158                           71
                                                                 --------                     --------
        Total non-performing loans                                    752                          591
                                                                 --------                      -------
Foreclosed assets, net:
    One-to-four family                                                 45                           53

    Multi-family and commercial                                       ---                          ---
                                                                 --------                      -------
        Total foreclosed assets, net                                   45                           53
                                                                 --------                      -------
        Total non-performing assets                               $   797                     $    644
                                                                  =======                     ========
        Total non-performing loans
           as a % of total loans                                     .52%                         .42%
</TABLE>
The increase in non-performing  loans at March 31, 1999 as compared to September
30,  1998 was  principally  due to the  death of four  borrowers,  which  caused
payment delays pending the settlement of their estates,  offset  somewhat by the
foreclosure  of one loan which  resulted in the Company  acquiring  title to the
mortgaged property. The net realizable value of the property,  totaling $32,000,
was  transferred  to other  real  estate,  and  since the net  realizable  value
approximated  the Company's  carrying  value,  the Company  recorded no loss. In
addition,  during the six months  ended March 31,  1999,  the  Company  sold one
parcel of other real estate  which  reduced  real estate  owned by $23,000,  and
wrote down  another  based on  existing  offers  from  prospective  buyers.  The
following  table  summarizes  the  activity in other real estate for the periods
presented:
<PAGE>
<TABLE>
<CAPTION>
                                                       Six Months Ended March 31,
                                                    1999                        1998
                                                  -------                     --------
                                                            (In thousands)
<S>                                                  <C>                         <C>  

Other real estate beginning of
    period                                           $ 53                        $ 248
Transfer of loans to other real
    estate owned                                       32                          252
Writedown of other real estate                        (17)                         ---
Sales of other real estate, net                       (23)                        (272)
                                                  -------                     --------
Other real estate end of period                      $ 45                        $ 228
                                                  =======                     ========
</TABLE>
<PAGE>
The allowance for loan losses was $2.0 million,  or 1.40% of period end loans at
March 31,  1999,  and  provided  coverage  of  non-performing  loans of  270.0%,
compared  to  coverage  of  330.0%  as of  September  30,  1998.  The  following
summarizes the activity in the allowance for loan losses:
<TABLE>
<CAPTION>
                                                                     Six Months Ended March 31,
                                                                   1999                     1998
                                                                 -------                 --------
                                                                           (In thousands)
<S>                                                              <C>                       <C>    
Allowance at beginning of the period                             $ 1,950                   $ 1,889
    Charge-offs                                                      (36)                      (89)
    Recoveries                                                        26                         7
                                                                --------                ----------
        Net charge-offs                                              (10)                      (82)
    Provision for loan losses                                         90                        99
                                                                --------                 ---------
Allowance at end of the period                                   $ 2,030                   $ 1,906
                                                                 =======                   =======
</TABLE>
<PAGE>
Total  deposits  were  $217.1  million at March 31,  1999,  an  increase of $7.1
million,  or 3.4% from the $210.0  million at September 30, 1998.  The following
table shows the deposit composition as of the respective balance sheet dates:
<TABLE>
<CAPTION>
                                             March 31, 1999                          September 30, 1998
                                   -----------------------------------      ---------------------------------
                                  (In thousands)         % of Deposits     (In thousands)       % of Deposits
<S>                                 <C>                        <C>           <C>                        <C>  
Savings                             $ 81,444                   37.5%         $ 78,075                   37.2%
Money market                           6,748                    3.1             5,949                    2.8
NOW                                   13,479                    6.2            12,396                    5.9
Non-interest demand                    7,722                    3.6             6,009                    2.9
Certificates of deposits             107,717                   49.6           107,548                   51.2
                                     -------                  -----           -------                  -----
                                    $217,110                  100.0%         $209,977                  100.0%
                                     =======                  =====           =======                  =====
</TABLE>
<PAGE>
The growth in deposits was  principally  generated by the  Company's  two newest
offices.  In addition,  the Company  continues  its strategy of growing its core
deposits,  principally  checking related  products.  Core deposits now represent
over 50% of total  deposits,  and  checking  products  represent  almost  10% of
deposits.

The Company's borrowings,  which are principally with the Federal Home Loan Bank
of New York  ("FHLB"),  were $31.9 million at March 31, 1999, an increase of $.1
million from the $31.8 million at September 30, 1998. As of March 31, 1999,  the
Company  still  has  additional  available  credit  of $7.4  million  under  its
overnight  line and $14.3 million  under its one month advance  program with the
FHLB.

Shareholders'  equity at March 31,  1999 was $68.6  million,  an increase of $.8
million or 1.2% from the $67.8 million at September  30, 1998.  The increase was
principally  caused by the Company's  $1.3 million of net income  retained after
cash dividends  offset by a $.9 million  decline in the Company's net unrealized
gain (loss) on  securities  available for sale,  net of taxes.  The Company also
recorded a $.4 million increase in shareholders'  equity due to the amortization
of restricted stock awards,  exercise of stock options and the release of shares
under the Company's ESOP.

Shareholders' equity as a percentage of total assets was 21.3% at March 31, 1999
compared to 21.6% at September 30, 1998. Book value per common share was $15.74,
or $16.15  excluding  unvested  shares of the  Company's  restricted  stock plan
("MRP"),  and was $17.76  excluding  unallocated  ESOP shares and  unvested  MRP
shares.
<PAGE>
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31,
1999 AND 1998

General

For the three months ended March 31,  1999,  the Company  recorded net income of
$1,041,000,  an increase of $69,000, or 7.1%, compared to the three month period
ended  March 31,  1998.  Basic and  diluted  earnings  per share were  $.27,  an
increase of 17.4%  compared to basic and diluted  earnings per share of $.23 for
the three  months  ended March 31,  1998.  For the three  months ended March 31,
1999,  weighted average common shares - basic were 3,850,029,  down 315,046,  or
7.6%, due to the Company's share repurchase programs.

Annualized  return on average  assets for the three  months ended March 31, 1999
and 1998,  was 1.31% and 1.35%,  respectively,  and return on average equity was
6.23% and 5.57%, respectively.

Net Interest Income

Net interest  income on a full tax  equivalent  basis for the three months ended
March 31, 1999, was $3.0 million, an increase of $83,000, or 2.9%, when compared
to the three months ended March 31, 1998.  The increase was  principally  volume
related as the Company  increased its average  earning assets $19.2 million,  or
6.7%, more than  offsetting the increase in interest  expense from the Company's
funding of its stock  repurchase  and corporate  owned life  insurance  ("COLI")
purchases.  The Company funded the share  repurchases  and COLI,  along with its
growth in earning assets,  principally  with borrowings and, to a lesser extent,
deposit growth.

Interest  income for the three months ended March 31, 1999 was $5.5 million on a
tax  equivalent  basis,  an increase of $241,000,  or 4.5%,  over the comparable
period last year.  The $19.2 million  increase in the average  volume of earning
assets  had a  positive  effect  on  interest  income as the  Company  sought to
leverage  its excess  capital,  offset  somewhat by a 15 basis point drop in the
yield on its average earning assets.

Average earning assets  increased  principally in the loan  portfolio,  which on
average grew $18.1 million,  or 14.2%.  Loan growth was  principally  due to the
promotion of a 15 year fixed rate mortgage product,  which increased volume, but
had an  adverse  impact  on the  loan  portfolio  yield  since  the  loans  were
originated at rates below the average portfolio yield. In addition, the Company,
due to lower market interest rates,  experienced  higher loan  prepayments,  and
refinancing  of its existing  portfolio,  which together with the loan promotion
caused the yield on the loan portfolio to decrease 35 basis points to 7.66%.
<PAGE>
Average  mortgage  backed  securities  ("MBS") were $76.0  million for the three
months ended March 31, 1999,  down $13.2  million,  or 14.8% from the comparable
period.  The  average  yield on MBS was  6.39%,  down 47 basis  points  from the
comparable  period, as the Company has been purchasing one year Treasury indexed
teaser rate  adjustable  rate  mortgages  ("ARM's") to balance its portfolio mix
since most loan  originations have been at fixed rates.  Consequently,  28.2% of
the average MBS portfolio  represented  teaser rate ARM's compared to only 15.8%
in the comparable  period.  The teaser ARM's were  purchased  during the initial
teaser rate period; therefore, the initial interest rate and yields will be less
than the fully indexed rate and yield.  Management  expects the average yield of
these ARM's to increase as they adjust to their fully indexed rate; however, the
actual  increase  will depend upon the level of the one-year  constant  maturity
treasury index when the rates adjust.
<PAGE>
Average other  securities  increased  $14.4  million,  or 20.9%,  as the Company
purchased  longer call  protected bank  qualified  municipals  and  non-callable
corporate  securities to increase yields and reduce  reinvestment  risk if rates
decline.  The  average  yield on the other  securities  portfolio  for the three
months ended March 31, 1999, was 7.43%,  an increase of 31 basis points from the
comparable period, as the Company replaced securities called and/or matured with
higher yielding municipals.  Municipal  securities  represented 46.6% of average
other securities during the three month period ended March 31, 1999, compared to
less than 14.3% in the comparable period.

Interest expense for the three months ended March 31, 1999, was $2.5 million, an
increase of $158,000,  or 6.6%. The change was principally due to an increase in
the average volume of interest bearing liabilities offset somewhat by a decrease
in the Company's cost of funds. Average interest bearing liabilities were $243.4
million,  an increase of $29.4  million,  or 13.7%,  as the Company  borrowed in
order to fund the  Company's  stock  repurchases,  its COLI purchase and earning
asset growth. Average long-term borrowings were up $20.4 million, as the Company
funded its stock  repurchases  and earning asset growth,  as well as converted a
portion  of its  short-term  borrowings  to  long-term  borrowings,  principally
through convertible (callable) advances. Average short-term borrowings were $8.9
million for the three months  ended March 31,  1999,  down $1.2 million from the
comparable  three month  period due to the change to  long-term  borrowings.  In
addition,  the Company's average certificates of deposit ("CD's") increased $6.0
million,  or 5.9%,  as the Company in fiscal 1998 promoted a 15 month CD program
at a premium rate due to competitive  pressures.  The cost of funds decreased 38
basis points to 4.15% as the Company has  generally  lowered its deposit  rates,
and benefitted from a reduction in the rate on short-term  borrowings  after the
Fed's Open Market Committee reduced the overnight bank rate 75 basis points.

The Company's net yield on average earning assets was 3.99% for the three months
ended March 31, 1999,  down 15 basis points compared to 4.14% for the comparable
period of the prior year. The decrease was  principally  caused by the Company's
stock  repurchase  program,  which reduced the level of no-cost funding sources,
and increased the amount of average  earning  assets funded by interest  bearing
liabilities,  and the  funding of the COLI  purchase  which  increased  interest
expense  without a  corresponding  increase  in interest  income.  For the three
months ended March 31, 1999,  the Company had $60.8  million of average  earning
assets with no funding costs, a decrease of $10.2  million,  or 14.5%,  from the
$71.0 million for the three months ended March 31, 1998.
<PAGE>
For more information on average balances, interest, yield and rate, please refer
to Table #1, included in this report.

Provision for Loan Losses

The Company  establishes  an  allowance  for loan losses based on an analysis of
risk factors in its loan portfolio.  This analysis  includes  concentrations  of
credit,  past loan loss  experience,  current  economic  conditions,  amount and
composition  of loan  portfolio,  estimated  fair  market  value  of  underlying
collateral, delinquencies and other factors. Accordingly, the calculation of the
adequacy of the  allowance  for loan losses is not based  solely on the level of
non-performing loans.

The  provision  for loan losses was  $45,000,  or .13% of average  loans for the
three months ended March 31, 1999,  the same as the  comparable  quarter,  which
represented  .14% of average loans. The Company had net recoveries of $1,000 for
the quarter ended March 31, 1999, as compared to net  chargeoffs of $29,000,  or
 .09% of  average  loans in the  comparable  period.  Non-performing  loans  were
$752,000 at March 31, 1999, or .52% of total loans, an increase of $110,000 from
March 31,
<PAGE>
1998,  when they were .50% of total loans.  At March 31, 1999, the allowance for
loan losses was $2,030,000,  or 1.40% of period end loans, and provided coverage
of non-performing loans of 270.0% compared to 1.49% and 296.9%, respectively, as
of March 31, 1998.

Non-Interest Income

Non-interest  income was $254,000 for the three months ended March 31, 1999,  an
increase of $121,000 or 91.0% from the three months  ended March 31,  1998.  The
increase was  principally  due to the  investment  performance  on the Company's
corporate  owned life  insurance  which  increased its cash  surrender  value by
$120,000.  In addition,  service fees on deposit accounts increased $23,000,  or
34.8%, as the Company continues to promote checking related products to increase
core deposits and diversify its revenues.

Non-Interest Expense

Non-interest  expense for the three months ended March 31, 1999 was  $1,542,000,
an increase of $148,000,  or 10.6%,  over the  comparable  period last year. The
increase was  principally the cost  attributable to our new supermarket  branch,
which opened in April 1998, as well as higher real estate  operations net, other
professional  fees,  and a contract  termination  charge to switch  ATM  service
providers.

Salaries and employee  benefits were up $43,000,  principally  from staffing the
supermarket  branch which opened in April 1998,  as well as the cost  associated
with an Executive Supplemental  Retirement Plan implemented in the third quarter
of fiscal 1998. Real estate operations net,  increased  $62,000,  as the Company
had writedowns on real estate in the 1999 quarter  compared to gains on sales in
the comparable  quarter.  Other  professional fees were $82,000,  an increase of
$15,000  as the  Company  incurred  higher  costs  due to higher  tax  research,
actuarial and investment advisory services. The Company also recorded a contract
termination  charge  of  $29,000  during  the  quarter  to  switch  ATM  service
providers.  Management  expects the change to improve customer  service,  reduce
operating costs, and increase service fee income by implementing  surcharging on
non-customer ATM transactions.

Income Tax Expense

Income tax expense for the three months ended March 31, 1999,  was  $357,000,  a
decrease of  $198,000,  or 35.7%,  from the  comparable  period  last year.  The
Company's  effective  tax rates for the three  months  ended  March 31, 1999 and
1998, were 25.54% and 36.35%,  respectively.  The decrease in both the effective
tax rate and  income  tax  expense is  principally  the impact of the  Company's
purchase of tax-exempt securities,  primarily bank qualified municipals, as well
as the non-taxable increase in cash surrender value of the COLI.
<PAGE>
COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED MARCH 31, 1999
AND 1998

General

For the six months  ended March 31,  1999,  the Company  recorded  net income of
$2,022,000,  an increase of $92,000,  or 4.8%,  compared to the six month period
ended March 31, 1998. Diluted earnings per share were $.52, an increase of 15.6%
compared to diluted  earnings  per share of $.45 for the six months  ended March
31,  1998.  Basic  earnings  per share  were $.53 for the six month  period,  an
increase of 15.2% compared to $.46 for the comparable six month period.  For the
six months ended March 31, 1999,  weighted  average  common  shares - basic were
3,844,594,  down  363,619,  or  8.6%,  due to  the  Company's  share  repurchase
programs.

Annualized  return on average assets for the six months ended March 31, 1999 and
1998, was 1.27% and 1.33%, respectively,  and return on average equity was 6.01%
and 5.44%, respectively.

Net Interest Income

Net interest income for the six months ended March 31, 1999, was $6.0 million on
a full tax equivalent basis, an increase of $181,000,  or 3.1%, when compared to
the six months ended March 31, 1998. The increase was principally volume related
as the Company increased its average earning assets $21.6 million, or 7.6%, more
than  offsetting the increase in interest  expense from the  borrowings  used to
fund its share  repurchases  and corporate  owned life insurance  ("COLI").  The
Company  funded the share  repurchases,  the COLI purchase and its earning asset
growth, principally with borrowings and, to a lesser extent, deposit growth.

Interest  income for the six months ended March 31, 1999 was $11.1  million on a
tax  equivalent  basis,  an increase of $541,000,  or 5.1%,  over the comparable
period.  The $21.6 million,  or 7.6%,  increase in the average volume of earning
assets  had a  positive  effect  on  interest  income as the  Company  sought to
leverage  its excess  capital,  offset  somewhat by a 17 basis point drop in the
yield on its average earning assets.

Average  earning  assets  increased  principally  in  the  loan  and  securities
portfolios, which on average grew 13.1% and 3.2%, respectively.  Loan growth was
principally due to the promotion of a 15 year fixed rate mortgage product, which
increased  volume,  but had an adverse impact on the loan portfolio  yield since
the loans  were  originated  at rates  below the  average  portfolio  yield.  In
addition,  the Company,  due to lower market interest rates,  experienced higher
loan prepayments, and refinancing of its existing portfolio, which together with
the loan  promotion  caused the yield on the loan portfolio to decrease 31 basis
points to 7.74%.

Average MBS were $80.7  million for the six months  ended March 31,  1999,  down
$7.1 million,  or 8.0%, from the comparable period. The average yield on MBS was
6.35%, down 59 basis points from the comparable  period, as the Company has been
purchasing one year Treasury  indexed teaser rate ARM's as previously  described
in the three month comparison.  Consequently, 29.1% of the average MBS portfolio
represented teaser rate ARM's compared to only 10.1% in the comparable period.
<PAGE>
Average other  securities  increased  $12.1  million,  or 17.5%,  as the Company
purchased  longer call  protected bank  qualified  municipals  and  non-callable
corporate  securities to increase yields and reduce  reinvestment  risk if rates
decline.  The average yield on the other securities portfolio for the six months
ended  March 31,  1999,  was 7.43%,  an  increase  of 37 basis  points  from the
comparable  period,  as the Company replaced  securities  called or matured with
higher yielding municipals.  Municipal securities now represent 45.9% of average
other securities, compared to less than 7.8% in the comparable period.

Interest  expense for the six months ended March 31, 1999, was $5.2 million,  an
increase of $360,000,  or 7.5%. The change was principally due to an increase in
the average volume of interest bearing liabilities offset somewhat by a decrease
in the Company's cost of funds. Average interest bearing liabilities were $240.4
million,  an increase of $28.2  million,  or 13.3%,  as the Company  borrowed in
order to fund the  Company's  stock  repurchases,  its COLI purchase and earning
asset growth. Average long-term borrowings were up $22.7 million, as the Company
funded its stock  repurchases and its earning asset growth, as well as converted
a portion of its  short-term  borrowings  to long-term  borrowings,  principally
through convertible (callable) advances. Average short-term borrowings were $7.2
million for the six months  ended March 31,  1999,  down $4.2  million  from the
comparable  six month  period  due to the  change to  long-term  borrowings.  In
addition,  the Company's  average CD's increased  $7.0 million,  or 7.0%, as the
Company in fiscal 1998  promoted a special 15 month CD program at a premium rate
due to  competitive  pressures.  The cost of funds  decreased 23 basis points to
4.32% as the Company has generally lowered its deposit rates.

The Company's net yield on average  earning  assets was 3.91% for the six months
ended March 31, 1999,  down 17 basis points compared to 4.08% for the comparable
period of the prior year. The decrease was  principally  caused by the Company's
stock  repurchase  program,  and the funding of the COLI  purchase.  For the six
months ended March 31, 1999,  the Company had $64.9  million of average  earning
assets with no funding  costs,  a decrease of $6.5  million,  or 9.2%,  from the
$71.4 million for the six months ended March 31, 1998.

For more information on average balances, interest, yield and rate, please refer
to Table #2, included in this report.

Provision for Loan Losses

The provision for loan losses was $90,000,  or .13% of average loans for the six
months ended March 31, 1999, down from $99,000,  or .16% of average loans in the
comparable period of the prior year. The decrease is principally attributable to
a reduction in net charge-offs to $10,000,  or .01% of average loans for the six
months ended March 31, 1999, as compared to $82,000, or .13% of average loans in
the comparable  period.  Despite the decrease in net charge-offs,  the Company's
provisions have remained  relatively constant due to the 13.4% growth in average
loans outstanding.  Nonperforming loans were $752,000 at March 31, 1999, or .52%
of total loans, an increase of $110,000 from March 31, 1998, when they were .50%
of total loans. At March 31, 1999, the allowance for loan losses was $2,030,000,
or 1.40% of period end loans, and provided coverage of  non-performing  loans of
270.0% compared to 1.49% and 296.9%, respectively, as of March 31, 1998.
<PAGE>
Non-Interest Income

Non-interest  income was $411,000  for the six months  ended March 31, 1999,  an
increase of $166,000,  or 67.8% from the six months  ended March 31,  1998.  The
increase was  principally  due to the  investment  performance  on the Company's
corporate  owned life  insurance  which  increased its cash  surrender  value by
$123,000.  In addition,  service fees on deposit accounts increased $44,000,  or
32.8%, as the Company continues to promote checking related products to increase
core deposits and diversify its revenues.

Non-Interest Expense

Non-interest expense for the six months ended March 31, 1999 was $3,007,000,  an
increase  of  $265,000,  or 9.7%,  over the  comparable  period  last year.  The
increase was  principally the cost  attributable to our new supermarket  branch,
which opened in April 1998, as well as higher real estate  operations net, other
professional  fees,  and a contract  termination  charge to switch  ATM  service
providers.

Salaries and employee  benefits were up $74,000,  principally  from staffing the
supermarket  branch which opened in April 1998,  as well as the cost  associated
with an Executive Supplemental  Retirement Plan implemented in the third quarter
of fiscal 1998. Real estate operations net,  increased  $92,000,  as the Company
had losses due to sales and  write-downs  of other  real  estate  during the six
months  ended  March  31,  1999,  compared  to gains on sales in the  comparable
period.  Other  professional  fees were $141,000,  an increase of $37,000 as the
Company  incurred  higher costs due to tax research,  actuarial  and  investment
advisory  services.  The Company also recorded a contract  termination charge of
$29,000 during the period to switch ATM service  providers.  Management  expects
the change to improve  customer  service,  reduce  operating costs, and increase
service fee income by implementing surcharging on non-customer ATM transactions.

Income Tax Expense

Income tax expense for the six months  ended March 31,  1999,  was  $750,000,  a
decrease of  $402,000,  or 34.9%,  from the  comparable  period  last year.  The
Company's  effective tax rates for the six months ended March 31, 1999 and 1998,
were 27.06% and 37.38%,  respectively.  The decrease in both the  effective  tax
rate and income tax expense is principally the impact of the Company's  purchase
of tax-exempt  securities,  primarily bank qualified municipals,  as well as the
non-taxable increase in cash surrender value of the COLI.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity  is the ability to generate  cash flows to meet  present and  expected
future funding needs.  Management monitors the Company's liquidity position on a
daily basis to evaluate its ability to meet  expected and  unexpected  depositor
withdrawals and to make new loans and or investments.  The Company is seeking to
reduce its high level of liquidity, but continues to manage its balance sheet so
there has been no need for unanticipated sales of assets.

The Company's primary sources of funds for operations are deposits,  borrowings,
principal and interest  payments on loans,  mortgage backed securities and other
securities available for sale.
<PAGE>
Net cash  provided by operating  activities  was $2.3 million for the six months
ended March 31, 1999, an increase of $1.8 million from the  comparable six month
period.  The increase was principally  the change in accrued  expenses and other
liabilities  caused by a decrease in official  bank  checks  outstanding  in the
prior  year.  Official  bank  checks  decreased  principally  as a result of the
Company's  payment of real estate taxes for mortgage  borrowers  using  escrowed
funds earlier in September 1998 than in September 1997.

Investing  activities  used $9.7 million in the six months ended March 31, 1999,
as the Company increased its assets  principally from the $10.0 million purchase
of COLI, and $5.6 million in loans,  offset somewhat by a $6.1 million reduction
in the  Company's  securities  portfolio.  Financing  activities  provided  $7.3
million, as the Company  experienced a $7.1 million increase in deposits,  and a
$.8 million increase in advances by borrowers for taxes,  somewhat offset by the
payment of cash  dividends of $.7 million on its common stock.  For more details
concerning  the  Company's  cash flows,  see  "Consolidated  Statements  of Cash
Flows."

An  important  source  of the  Company's  funds  is the  Bank's  core  deposits.
Management  believes that a substantial  portion of the Bank's $217.1 million of
deposits   are  a  dependable   source  of  funds  due  to  long-term   customer
relationships.  The Company does not currently use brokered deposits as a source
of funds,  and as of March 31, 1999,  deposit accounts having balances in excess
of $100,000  totaled $23.2 million,  or 10.7%,  of total  deposits.  The Bank is
required  to  maintain  minimum  levels of liquid  assets as  defined by the OTS
regulations.  The  requirement,  which may be varied by the OTS  depending  upon
economic  conditions and deposit  flows,  is based upon a percentage of deposits
and short-term borrowings. The OTS required minimum liquidity ratio is currently
4% and for the month of March  1999,  the Bank  exceeded  that,  maintaining  an
average liquidity ratio of 49.48%.

The Company  anticipates  that it will have sufficient funds to meet its current
commitments.  At March 31, 1999, the Company had  commitments to originate loans
of $3.7  million.  In  addition,  the Company had  undrawn  commitments  of $3.3
million on home equity and other lines of credit. Certificates of deposits which
are  scheduled  to mature in one year or less at March 31, 1999,  totaled  $74.9
million,  and  management  believes that a significant  portion of such deposits
will remain with the Company.
<PAGE>
Although there are no minimum capital ratio  requirements  for the Company,  the
Bank is required to maintain minimum regulatory capital ratios. The following is
a summary of the Bank's  actual  capital  amounts and ratios at March 31,  1999,
compared to the OTS minimum capital requirements:
<TABLE>
<CAPTION>
                                      Actual                             Minimum
                                      Amount           %                 Amount           %
                                      ------          ---                ------          ---
                                                      (Dollars in Thousands)
<S>                                  <C>              <C>               <C>              <C> 
Tangible Capital                     $57,495          18.06%            $ 4,776          1.5%
Core Capital                          57,495          18.06              12,735          4.0
Risk Based Capital                    59,416          38.70              12,283          8.0
</TABLE>
On April  18,  1999,  the  Company  is no  longer  subject  to stock  repurchase
restrictions of the OTS. The Company expects,  subject to market conditions,  to
continue to use stock  repurchase  programs  as part of its  capital  management
strategies. At March 31, 1999, the Holding Company had
approximately  $5.7 million in available  resources to pursue stock repurchases.
Furthermore,  the Bank  could pay $22.8  million  of  dividends  to the  Holding
Company  after  notifying the OTS in writing.  However,  the Company has made no
commitments  to use a  specific  amount  to  repurchase  stock  and  there is no
guaranty that the Company will actually repurchase any of its stock.
<PAGE>
Year 2000 Readiness Disclosure

The  Year  2000  ("Y2K")  issue  confronting  the  Company  and  its  suppliers,
customers,  customers'  suppliers  and  competitors  centers on the inability of
computer systems to recognize the year 2000. Many existing computer programs and
systems  originally  were programmed with six digit dates that provided only two
digits to identify the calendar  year in the date field.  With the impending new
millennium,  these  programs and computers  will recognize "00" as the year 1900
rather than the year 2000.

Substantially,  all of the Company's  mission critical systems are outsourced or
are  purchased  software  packages.  As a result,  much of the  remediation  and
testing  process is dependent on the accuracy of work performed by, and the Year
2000 compliance of software, hardware and equipment provided by, vendors.

The  Company's  total Y2K project cost is  estimated  to be  $100,000,  of which
$50,000 is expected to be hardware  and software  upgrades.  So far, the Company
has expensed  $30,000 of the project cost,  and expects to amortize the hardware
and software upgrades over their estimated useful lives of three to five years.

The  Company's  progress on its Year 2000  readiness is continuing as scheduled.
During the  quarter,  the  Company  completed  the testing of all of its mission
critical systems, and processed transactions with dates up through and including
March 1, 2000. The results of the Company's tests, as well as other customers of
the Company's data processing  service provider,  disclosed no Year 2000 issues.
Dates  remaining to be tested are year-end  2000,  as well as three dates within
year 2001.

The Company expects its mission  critical  systems to be compliant by June 1999,
and all others by September 1999.

The Company  expects that when the century  changes,  disruption in service will
come not from a failure of its systems or the systems of the providers with whom
it interfaces,  but rather from outside  agencies  (i.e.  electric and telephone
companies)  beyond its  control.  Therefore,  contingency  planning and business
resumption  planning will be based on the  Company's  formal  Disaster  Recovery
Program,  which includes using such things as spreadsheet  software or reverting
to manual systems until problems can be corrected.

The Company has written a Disaster  Recovery and Year 2000 Contingency Plan, and
management  expects to test the plan before June 30,  1999.  The Company is also
undertaking  various customer  awareness  programs,  such as posted  statements,
mailing of FDIC brochures and publishing information on its website.
<PAGE>
                   PART I - FINANCIAL INFORMATION (continued)

Item 3.            Quantitative and Qualitative Disclosures About Market Risk

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

               TABLE #1 AVERAGE BALANCES, INTEREST, YIELD AND RATE

The following table presents, for the periods indicated, the total dollar amount
of  interest  income  from  average  interest-earning  assets and the  resultant
yields, as well as the interest expense on average interest-bearing liabilities,
expressed  both in  dollars  and rates.  Tax  equivalent  adjustments  reflected
principally on municipal  securities  totaled $260,000 and $75,000 for the three
month periods ended March 31, 1999 and 1998, respectively.  All average balances
are daily average balances.  Non-accruing  loans have been included in the table
as loans  receivable  with  interest  earned  recognized  on a cash basis  only.
Securities include both the securities available for sale portfolio and the held
to maturity  portfolio,  other than mortgage backed  securities  which are shown
separately. Mortgage backed securities are primarily classified as available for
sale. Securities available for sale are shown at amortized cost.
<PAGE>
<TABLE>
<CAPTION>
                                                                THREE MONTH PERIODS ENDED
                                                  March 31, 1999                          March 31, 1998
                                          ------------------------------          ----------------------------
                                          Average                                 Average            
                                          Balance   Interest   Yield/Rate         Balance   Interest  Yield/Rate
                                          -------   --------   ----------         -------   --------  ----------
                                                                  (Dollars in Thousands)
<S>                                       <C>        <C>            <C>           <C>        <C>         <C>  
Interest-Earning Assets
  Loans receivable, net                   $145,027   $ 2,778        7.66%         $126,961   $ 2,542     8.01%
  Mortgage-backed securities                76,017     1,215        6.39%           89,256     1,530     6.86%
  Securities                                83,069     1,543        7.43%           68,710     1,223     7.12%
  Federal funds sold and other                  96         3       12.67%              129         3     9.43%
                                          -------   --------                      --------   -------             
  Total interest-earning assets            304,209     5,539        7.28%          285,056     5,298     7.43%
                                          -------   --------                      --------   -------           
Allowance for loan losses                  (1,995)                                 (1,900)
Other assets, net                           19,852                                   9,621
                                          -------                                 --------                     
  Total Assets                            $322,066                                $292,777
Interest-Bearing Liabilities
  Savings deposits                        $ 79,863      $585        2.97%         $ 78,657      $644     3.32%
  Money market                               6,192        46        3.01%            6,412        51     3.23%
  Now deposits                              13,812        66        1.94%           11,043        66     2.42%
  Certificates of deposit                  107,680     1,406        5.30%          101,637     1,417     5.65%
  Short-term borrowings                      8,888       108        4.93%           10,065       144     5.80%
  Long-term borrowings                      25,000       322        5.22%            4,624        59     5.17%
  Escrow and other                           1,996        15        3.05%            1,587         9     2.30%
                                          -------   --------                      --------   -------          
  Total interest-bearing
      liabilities                          243,431     2,548        4.15%          214,025     2,390     4.53%
                                          -------   --------                      --------   -------           
Non-interest bearing                         7,247                                   4,886
Other liabilities                            3,611                                   3,114
Shareholders' equity                        67,777                                  70,752
                                          -------                                 --------                    
 Total Equity and Liabilities             $322,066                                $292,777
                                          ========                                ========

  Net interest income                                 $2,991                                  $2,908
                                                    ========                                ========
  Net interest rate spread                                          3.13%                                2.90%
                                                                 ========                             ========
  Net yield on average
       interest-earning assets                                      3.99%                                4.14%
                                                                 ========                             ========
  Average interest earning
       assets to average interest
         bearing liabilities               124.97%                                 133.19%
                                          =======                                 =======
  Earning Assets/Total Assets               94.46%                                  97.36%
                                          =======                                 =======
</TABLE>
<PAGE>
               TABLE #2 AVERAGE BALANCES, INTEREST, YIELD AND RATE

The following table presents, for the periods indicated, the total dollar amount
of  interest  income  from  average  interest-earning  assets and the  resultant
yields, as well as the interest expense on average interest-bearing liabilities,
expressed  both in  dollars  and rates.  Tax  equivalent  adjustments  reflected
principally  on municipal  securities  totaled  $495,000 and $94,000 for the six
month periods ended March 31, 1999 and 1998, respectively.  All average balances
are daily average balances.  Non-accruing  loans have been included in the table
as loans  receivable  with  interest  earned  recognized  on a cash basis  only.
Securities include both the securities available for sale portfolio and the held
to maturity  portfolio,  other than mortgage backed  securities  which are shown
separately. Mortgage backed securities are primarily classified as available for
sale. Securities available for sale are shown at amortized cost.
<PAGE>
<TABLE>
<CAPTION>
                                                                     SIX MONTH PERIODS ENDED
                                                March 31, 1999                                      March 31, 1998
                                    ----------------------------------------         ------------------------------------------
                                    Average                                           Average
                                    Balance        Interest        Yield/Rate         Balance         Interest       Yield/Rate
                                    -------        --------        ----------         -------         --------       ----------
                                                                     (Dollars in Thousands)
<S>                                 <C>             <C>                 <C>           <C>              <C>                <C>  
Interest-Earning Assets
  Loans receivable, net             $143,273        $ 5,542             7.74%         $126,692         $ 5,099            8.05%
  Mortgage-backed securities          80,673          2,563             6.35%           87,723           3,044            6.94%
  Securities                          81,245          3,019             7.43%           69,143           2,440            7.06%
  Federal funds sold and other            78              4            10.26%               86               4            9.33%
                                    --------       --------                           --------       ---------
  Total interest-earning assets      305,269         11,128             7.29%          283,644          10,587            7.46%
                                                   --------                                          ---------
Allowance for loan losses            (1,980)                                           (1,888)
Other assets, net                     15,024                                             9,195
                                    --------                                          --------
  Total Assets                      $318,313                                          $290,951
                                    ========                                          ========
Interest-Bearing Liabilities
  Savings deposits                  $ 78,831         $1,192             3.03%         $ 78,446          $1,326            3.39%
  Money market                         6,145             91             2.97%            6,669             106            3.19%
  Now deposits                        13,457            131             1.95%           11,015             135            2.46%
  Certificates of deposit            107,798          2,904             5.40%          100,789           2,841            5.65%
  Short-term borrowings                7,194            180             5.02%           11,384             328            5.78%
  Long-term borrowings                25,000            651             5.22%            2,312              59            5.12%
  Escrow and other                     1,938             26             2.69%            1,579              20            2.54%
                                    --------       --------                           --------        --------
  Total interest-bearing
      liabilities                    240,363          5,175             4.32%          212,194           4,815            4.55%
                                                    -------                                             ------
Non-interest bearing                   6,888                                             4,731
Other liabilities                      3,584                                             2,932
Shareholders' equity                  67,478                                            71,094
                                     -------                                          --------
  Total Equity and Liabilities      $318,313                                          $290,951
                                    ========                                          ========

  Net interest income                                $5,953                                             $5,772
                                                     ======                                             ======
  Net interest rate spread                                              2.97%                                             2.91%
                                                                        ====                                              ====
  Net yield on average
       interest-earning assets                                          3.91%                                             4.08%
                                                                        ====                                              ====
  Average interest earning
       assets to average interest
         bearing liabilities         127.00%                                           133.67%
                                     ======                                            ======
  Earning Assets/Total Assets         95.90%                                            97.49%
                                      =====                                             =====
</TABLE>
<PAGE>
                         CATSKILL FINANCIAL CORPORATION
                                    FORM 10-Q

                                 MARCH 31, 1999

--------------------------------------------------------------------------------

                           PART II - OTHER INFORMATION

Item 1.           Legal Proceedings

In the  ordinary  course of  business,  the  Company and the Bank are subject to
legal actions which involve  claims for monetary  relief.  Management,  based on
advice of counsel,  does not believe  that any  currently  known legal  actions,
individually or in the aggregate will have a material effect on its consolidated
financial condition or results of operation.

Item 2.           Change in Securities
                           None

Item 3.           Defaults on Senior Securities
                           Not Applicable

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

At the annual  meeting of  shareholders  held on February 16,  1999,  there were
3,838,222 voting shares present in person or by proxy,  which represented 90.37%
of the Company's  outstanding  shares eligible to vote of 4,247,088.  Votes were
taken on the following shareholder proposals:

         Proposal #1  "Election of one director to serve for a two year term and
                      until his successor has been duly elected and qualified."
<TABLE>
<CAPTION>
                                                  Votes
                                                   For            Withheld
<S>                                              <C>                <C>   
                      Edward P. Stiefel         3,809,892          28,330
</TABLE>

                      "Election  of two  directors to serve for three year terms
                      and until  their  successors  have been duly  elected  and
                      qualified."
<TABLE>
<CAPTION>
                                                   Votes
                                                    For            Withheld
<S>                                              <C>                <C>   
                      Wilbur J. Cross           3,808,766          29,456
                      Allan D. Oren             3,789,221          49,001
</TABLE>

<PAGE>
         The  Board  of  Directors  of the  Company  currently  consists  of six
         members. In addition to the directors named above, continuing directors
         are George P. Jones, Richard A. Marshall, and Hugh J. Quigley.

         Proposal #2  "Approval  of  an  amendment  to  the  Catskill  Financial
                       Corporation  1996  Stock  Option  and  Incentive  Plan to
                       provide  that  awards  under the Plan shall fully vest in
                       the  event of a  change  in  control  of  the  Company or
                       Catskill Savings Bank." 
<TABLE>
<CAPTION>
                    Votes            Votes
                     For            Against          Abstain            Non-Vote
                     ---            -------          -------            --------
                  <S>               <C>               <C>                <C>   
                  3,464,441         252,130           28,341             93,310
</TABLE>

         Proposal #3  "Approval  of  an  amendment  to  the  Catskill  Financial
                  Management  Recognition  Plan to provide that awards under the
                  Plan  shall  fully vest in the event of a change in control of
                  the Company or Catskill Savings Bank."
<TABLE>
<CAPTION>
                    Votes            Votes
                     For            Against          Abstain            Non-Vote
                     ---            -------          -------            --------
                  <S>               <C>               <C>                <C>   
                 3,464,144         256,758            24,010             93,310
</TABLE>
         Proposal #4  "Ratification  of the  appointment of KPMG LLP as auditors
                  for the  Company  for the fiscal  year  ending  September  30,
                  1999."
<TABLE>
<CAPTION>

                    Votes            Votes
                     For            Against          Abstain            
                     ---            -------          -------            
                  <S>               <C>               <C>               
                  3,811,347          19,490          7,385
</TABLE>
There were no broker non-votes for either proposal #1 or proposal #4.

Item 5.           Other Information
                           None

Item 6.           Exhibits and Reports on Form 8-K

 (a) Exhibits

         (10.1)   Employment  agreement  dated  February 1, 1999, by and between
                  Catskill Savings Bank and Deborah S. Henderson.

         (11)     Computation of Net Income per Common Share 

         (27)     Financial Data Schedule (included only in EDGAR filing)
<PAGE>
                                   SIGNATURES

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

                                                CATSKILL FINANCIAL CORPORATION


Date: May 13, 1999                              /s/ Wilbur J. Cross
                                                --------------------------------
                                                Wilbur J. Cross
                                                Chairman of the Board, President
                                                and Chief Executive Officer
                                                (Principal Executive Officer)



Date: May 13, 1999                              /s/ David J. DeLuca
                                                --------------------------------
                                                David J. DeLuca
                                                Chief Financial Officer
                                                (Principal Financial and
                                                Accounting Officer)