UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q
(Mark One)

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

      For the quarterly period ended June 30, 1999

                                       OR

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

      For the transition period from                  to

                         Commission File Number 0-27716

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



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

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

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

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

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

CLASSES OF COMMON STOCK             NUMBER OF SHARES OUTSTANDING, JUNE 30, 1999
    $0.01 Par Value                              2,587,739

<PAGE>

                          YONKERS FINANCIAL CORPORATION
                                    FORM 10-Q
                      QUARTERLY PERIOD ENDED JUNE 30, 1999


                                                                 Page Number



                        PART I. FINANCIAL INFORMATION

Item 1.   Financial Statements (Unaudited)
          Consolidated Balance Sheets at June 30, 1999
          and September 30, 1998...................................    2

          Consolidated Statements of Income for the
          Three and Nine Months
          Ended June 30, 1999 and 1998.............................    3

          Consolidated Statement of Changes in Stockholders'
          Equity for the Nine Months Ended June 30, 1999...........    4

          Consolidated Statements of Cash Flows for the Nine
          Months Ended June 30, 1999 and 1998......................    5

          Notes to Consolidated Financial Statements...............    6

Item 2.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations............    8

Item 3.   Quantitative and Qualitative Disclosures About
          Market Risk..............................................   24


                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings.........................................   24

Item 2.  Changes in Securities.....................................   24

Item 3.  Defaults Upon Senior Securities...........................   24

Item 4.  Submission of Matters to a Vote of Security Holders.......   25

Item 5.  Other Information.........................................   25

Item 6.  Exhibits and Reports on Form 8-K..........................   25

         Signature Page............................................   26



<PAGE>
<TABLE>
<CAPTION>
PART I - ITEM 1

       YONKERS FINANCIAL CORPORATION AND SUBSIDIARY
                CONSOLIDATED BALANCE SHEETS
                        (UNAUDITED)
             (IN THOUSANDS, EXCEPT SHARE DATA)

                                             June 30,       September 30,
                                               1999              1998
                                             --------       -------------
<S>                                          <C>                 <C>
ASSETS
 Cash and cash equivalents:
    Cash and due from banks                  $  5,481        $   3,195
    Short-term investments                         --            1,000
                                             --------        ---------
      Total cash and cash equivalents           5,481            4,195
                                             --------        ---------
Securities:
     Available  for  sale,  at fair  value
     (amortized cost of $118,400 at
     June 30,  1999 and  $123,317  at
     September 30, 1998)                      114,931          125,225
     Held to maturity,  at amortized  cost
     (fair value of $24,367 at
     June  30,  1999 and  $43,948  at          24,291           43,303
     September 30, 1998)                     --------         --------
       Total securities                       139,222          168,528
                                             --------         --------
Real estate  mortgage loans held for           12,052           13,334
sale at lower of cost or market value        --------         --------
Loans receivable, net:
     Real estate mortgage loans               215,632          177,783
     Consumer  and   commercial   business      7,964            7,544
      loans

     Allowance for loan losses                 (1,489)          (1,302)
                                             --------         --------
       Total loans receivable, net            222,107          184,025
                                             --------         --------

Accrued interest receivable                     2,475            2,791
Federal Home Loan Bank  ("FHLB") stock          6,426            6,426

Office properties and equipment, net            1,847            1,258
Other assets                                    2,990            2,467
                                             --------         --------
     Total assets                            $392,600         $383,024
                                             ========         ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
     Deposits                                $262,451         $231,181
     Securities repurchase agreements          71,012          107,790
     FHLB advances                             19,000               --

     Other liabilities                          1,998            2,251
                                             --------         --------

      Total liabilities                       354,461          341,222
                                             --------         --------

Commitments and contingencies

Stockholders' equity:
     Preferred  stock (par value $0.01 per
     share; 100,000 shares authorized;
     none issued or outstanding)                   --              --
     Common  stock  (par  value  $0.01 per
     share: 4,500,000 shares authorized;
     3,570,750 shares issued)                      36              36
     Additional paid-in capital                35,166          35,044

     Unallocated   common  stock  held  by
     employee stock ownership plan ("ESOP")    (1,928)         (2,142)

     Unamortized  awards of  common  stock
     under management recognition plan
     ("MRP")                                     (694)           (846)

     Treasury  stock,  at  cost (983,011
     shares at June 30, 1999 and
     844,511  shares at  September
     30, 1998)                                (15,510)        (13,189)
     Retained income, substantially            23,151          21,754
      restricted

     Accumulated other comprehensive           (2,082)          1,145
     (loss) income (note 2)                  --------        --------
          Total stockholders' equity           38,139          41,802
                                             --------        --------
                                             $392,600        $383,024
                                             ========        ========

</TABLE>

See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>

         YONKERS FINANCIAL CORPORATION AND SUBSIDIARY
               CONSOLIDATED STATEMENTS OF INCOME
                          (UNAUDITED)
             (IN THOUSANDS, EXCEPT PER SHARE DATA)


                                   For the Three Months   For the Nine Months
                                      Ended June 30,         Ended June 30,
                                   --------------------   -------------------
                                     1999         1998      1999       1998
                                   --------     -------   --------    -------
<S>                                <C>            <C>       <C>       <C>
Interest and dividend income:
   Loans                           $  4,190     $ 3,362   $ 11,734    $ 9,580
   Securities                         2,306       2,942      7,488      8,814
   Other earning assets                 153         125        520        335
                                   --------     -------   --------    -------
     Total interest and dividend
      income                          6,649       6,429     19,742     18,729
                                   --------     -------   --------    -------

Interest expense:
   Deposits                           2,392       2,298      7,113      6,698
   Securities repurchase
    agreements                        1,048       1,321      3,364      3,158
   FHLB advances                        145          99        452        186
                                   --------     -------   --------    -------

     Total interest expense           3,585       3,718     10,929     10,042
                                   --------     -------   --------    -------

       Net interest income            3,064       2,711      8,813      8,687

Provision for loan losses                50          75        200        325
                                   --------     -------   --------    -------
       Net interest income after
       provision for loan losses      3,014       2,636      8,613      8,362

Non-interest income:
   Service charges and fees             298         242        824        675
   Net (loss) gain on sales of
   real estate mortgage
   loans held for sale                  (65)         79        181        273
   Net gain on sales of
    securities                           25         195         98        143
   Other                                 16          18        107         48
                                   --------     -------   --------    -------

    Total non-interest income           274         534      1,210      1,139
                                   --------     -------   --------    -------

Non-interest expense:
   Compensation and benefits          1,194       1,011      3,465      2,978
   Occupancy and equipment              323         256        874        691
   Data processing service fees         154         156        473        415
   Federal deposit insurance
   costs                                 36          33        104         97
   Other                                555         496      1,690      1,579
                                   --------     -------   --------    -------
    Total non-interest expense        2,262       1,952      6,606      5,760
                                   --------     -------   --------    -------
      Income before income tax
      expense                         1,026       1,218      3,217      3,741

Income tax expense                      369         491      1,226      1,518
       Net income                  $    657     $   727   $  1,991    $ 2,223
                                   ========     =======   ========    =======

Earnings per common share(note3):
       Basic                       $   0.28     $  0.28   $   0.82    $  0.84
       Diluted                         0.27        0.27       0.81       0.82
                                   ========     =======   ========    =======
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>
<TABLE>
<CAPTION>
                                                             YONKERS FINANCIAL CORPORATION AND SUBSIDIARY
                                                      CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                                                               (Unaudited)
                                                                (Dollars in thousands, except per share data)

                                                             Unallocated Unamortized
                                                               Common     Awards of                       Accumulated
                                                  Additional    Stock      Common                            Other         Total
                                          Common    Paid-in     Held        Stock    Treasury  Retained  Comprehensive Stockholders'
                                           Stock    Capital    by ESOP    Under MRP    Stock    Income    Income(loss)     Equity
                                           -----    -------    -------    ---------    -----    ------    ------------     ------
<S>                                          <C>       <C>       <C>       <C>            <C>       <C>      <C>             <C>

Balance at September 30, 1998              $  36    $35,044    $(2,142)   $   (846)   $(13,189) $21,754   $      1,145    $ 41,802

Net income                                    --         --         --          --          --    1,991             --       1,991
Dividends paid ($0.24 per share)              --         --         --          --          --     (594)            --        (594)
Treasury stock purchased                      --         --         --          --      (2,385)      --             --      (2,385)
Repurchased  stock awarded under MRP          --         --         --         (64)         64       --             --          --
 (5,000 shares)
Amortization of MRP awards                    --         --         --         216          --       --             --         216
Tax benefits from vested
  MRP awards                                  --         12         --          --          --       --             --          12
ESOP shares released for
 allocation (21,428 shares)                   --        110        214          --          --       --             --         324
Decrease in net unrealized gain on
 available-for-sale securities,               --         --         --          --          --       --         (3,227)     (3,227)
 net of tax                                -----    -------    -------    --------    --------   ------    -----------     -------


Balance at June 30, 1999                   $  36    $35,166    $(1,928)   $   (694)   $(15,510) $23,151    $    (2,082)    $38,139
                                           =====    =======    =======    ========    ========  =======    ===========     =======

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>
                     YONKERS FINANCIAL CORPORATION AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (UNAUDITED)
                                    (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                   FOR THE NINE MONTHS
                                                                        ENDED JUNE 30,
                                                                   -------------------
                                                                     1999           1998
                                                                   --------      --------
<S>                                                               <C>            <C>
Cash flows from operating activities:
  Net income                                                       $  1,991      $  2,223
  Adjustments  to  reconcile  net  income to net
   cash provided by operating activities:
     Provision for loan losses                                          200           325
     ESOP and MRP expense                                               540           624
     Depreciation and amortization expense                              262           192
     Amortization  of deferred  fees,  discounts
      and premiums, net                                                 225            57
     Net gain on sales of real  estate  mortgage
      loans held for sale                                              (181)         (273)
     Net (gain) loss on sales of securities                             (98)         (143)
     Other adjustments, net                                           1,887          (227)
                                                                   --------      --------
       Net cash provided by operating activities                      4,826         2,778
                                                                   --------      --------
Cash flows from investing activities:
  Purchases of available-for-sale securities                        (49,302)      (80,231)
  Proceeds from principal payments, maturities
  and calls of securities:
     Available-for-sale                                              36,379        19,858
     Held-to-maturity                                                19,004        21,513
  Proceeds from sales of securities:
     Available-for-sale                                              17,647        22,863
     Held-to-maturity                                                    --           630
  Disbursements for loan originations                              (100,005)     (126,557)
  Principal collections on loans                                     28,731        16,839
  Proceeds from sales of loans                                       34,201        42,599
  Purchases of FHLB stock                                                --        (3,390)
  Other investing cash flows                                           (708)         (168)
                                                                   --------      --------
     Net cash used in investing activities                          (14,053)      (86,044)
                                                                   --------      --------
Cash flows from financing activities:
  Net increase in deposits                                           31,270        24,341
  Net(decrease)  increase in borrowings
  with original  terms of three months or less:
       Securities repurchase agreements                             (32,178)        9,333
       FHLB advances                                                  4,000         1,000
 Proceeds from longer-term borrowings                                10,400        56,461
  Common stock repurchased                                           (2,385)       (4,787)
  Dividends paid                                                       (594)         (556)
                                                                   --------      --------
       Net cash provided by financing
        activities                                                   10,513        85,792
                                                                   --------      --------

Net increase in cash and cash equivalents                             1,286         2,526
Cash and cash equivalents at beginning of period                      4,195         3,593
                                                                   --------      --------
Cash and cash equivalents at end of period                         $  5,481      $  6,119
                                                                   ========      ========
Supplemental information:
  Interest paid                                                    $ 10,701      $  9,843
  Income taxes paid                                                     741         1,461
                                                                   ========      ========
</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>


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

(1)  BASIS OF PRESENTATION

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

   On March 31, 1999 the Association established a real estate investment trust,
Yonkers REIT, Inc. (the "REIT"), a wholly-owned subsidiary. On such date, $119.3
million in real estate loans was  transferred  from the Association to the REIT.
On June 30, 1999, $114.5 million in real estate loans were held by the REIT. The
assets  transferred  to the  REIT  are  viewed  by  regulators  as  part  of the
Association's assets in consolidation.

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

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




<PAGE>

(2) COMPREHENSIVE INCOME

   During the quarter ended December 31, 1998, the Company adopted  Statement of
Financial  Accounting  Standards  ("SFAS")  No.  130,  "Reporting  Comprehensive
Income," which establishes  standards for reporting and display of comprehensive
income (and its  components)  in financial  statements.  The standard  does not,
however,  specify  when  to  recognize  or how to  measure  items  that  make up
comprehensive  income.  Comprehensive  income  represents net income and certain
amounts reported  directly in stockholders'  equity,  such as the net unrealized
gain or loss on  securities  available  for sale.  While  SFAS No.  130 does not
require a specific  reporting  format, it does require that an enterprise report
an  amount  representing  total  comprehensive  income  for  the  period.  Total
comprehensive  income  (loss) for the nine months ended June 30, 1999 was ($1.2)
million,  consisting  of $2.0  million in net income less a net decrease of $3.2
million in the after-tax net unrealized gain on  available-for-sale  securities.
For the nine months  ended June 30,  1998,  total  comprehensive  income of $2.1
million  consisted of net income of $2.2 million less a net decrease of $101,000
in the after-tax net unrealized gain on available-for-sale securities.

(3) EARNINGS PER SHARE

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



<PAGE>


   The following is a summary of the number of shares  utilized in the Company's
EPS calculations for the three and nine months ended June 30, 1999 and 1998. For
purposes of computing  basic EPS, net income  applicable to common stock equaled
net income for both periods  presented.

                                         For The Three    For the Nine
                                             Months           Months
                                         Ended June 30,    Ended June 30,
                                       ----------------  ----------------
                                          1999     1998     1999     1998
                                          ----     ----     ----     ----
                                                    (in thousands)

Weighted average common shares
outstanding for computation of
basic EPS (1)                            2,383    2,578    2,429    2,656
Common-equivalent shares due to
the dilutive effect of stock
options and MRP awards (2)                  53       86       35       57
                                       -------  -------  -------  -------
Weighted average common shares for
   computation of diluted EPS            2,436    2,664    2,463    2,713
                                       =======  =======  =======  =======


(1)  Excludes unvested MRP awards and unallocated ESOP shares that have not been
     committed to be released.

(2)  Computed using the treasury stock method.



<PAGE>


PART I. ITEM 2.

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

FORWARD-LOOKING STATEMENTS

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

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

COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1999 AND SEPTEMBER 30, 1998

    Total  assets at June 30, 1999  amounted to $392.6  million,  an increase of
$9.6 million from $383.0 million at September 30, 1998.  Asset growth during the
period  related  primarily  to  increased  loan  volume  funded  with  deposits,
reflecting the continued growth of the Company's retail franchise.

   Securities at June 30, 1999  decreased  $29.3 million to $139.2  million from
$168.5 million at September 30, 1998, while cash and cash equivalents  increased
$1.3 million to $5.5 million at June 30, 1999 from $4.2 million at September 30,
1998.  Overall,  total loans (loans receivable and mortgage loans held for sale)
increased  $36.8 to $234.1  million  at June 30,  1999 from  $197.3  million  at
September  30, 1998.  The loan growth during the nine months ended June 30, 1999
represents loan originations of $100.0 million,  offset by principal collections
of $28.8 million,  loans sold of $34.2 million, an increase in the allowance for
loan losses of $187,000 and a provision for losses on real estate mortgage loans
held  for  sale of  $97,000.  The  portfolio  growth  in the  nine-month  period
primarily  reflects  increases of $39.1 million in one-to  four-family  mortgage
loans,   $8.5  million  in  commercial  real  estate  loans,   $3.1  million  in
multi-family  loans,  and  $503,000 in  consumer  loans,  partially  offset by a
decrease of $211,000 in construction loans.
<PAGE>

   Deposit  liabilities  increased  $31.3 million to $262.5  million at June 30,
1999 from  $231.2  million  at  September  30,  1998.  The  increase  in deposit
liabilities  primarily  reflects growth in the Company's in-store branch network
of $17.8  million  along with  aggressive  cross-selling  and  quality  customer
service.  Borrowings  decreased  $17.8 million to $90.0 million at June 30, 1999
from $107.8 million at September 30, 1998.

   Stockholders'  equity  amounted  to $38.1  million  at June  30,  1999 a $3.7
million decrease from September 30, 1998. The decrease is primarily attributable
to a  decrease  of  $3.2  million  in  the  after-tax  net  unrealized  gain  on
available-for-sale  securities and treasury  stock  repurchases of $2.4 million,
offset by net income  retained  after  dividends  of $1.4 million and a combined
increase  of $552,000  relating to the  employee  stock  ownership  plan and the
management  recognition plan. The ratio of stockholders'  equity to total assets
decreased  to 9.71% at June 30, 1999 from 10.91% at  September  30,  1998.  Book
value per share (computed based on total shares issued less treasury shares) was
$14.74 at June 30, 1999,  a decrease  from $15.33 at  September  30,  1998.  See
"Liquidity and Capital  Resources" for information  regarding the  Association's
regulatory capital amounts and ratios.

ANALYSIS OF NET INTEREST INCOME

   The following tables set forth the Company's average balance sheets,  average
yields and costs (on an annualized basis), and certain other information for the
three and nine months  ended June 30,  1999 and 1998.  The yields and costs were
derived by dividing  interest income or expense by the average balance of assets
or liabilities,  respectively,  for the periods shown. Substantially all average
balances were computed based on daily  balances.  Interest  income  includes the
effect of deferred  fees,  discounts  and premiums  which are  considered  yield
adjustments.


<PAGE>
<TABLE>
<CAPTION>
                                                             FOR THE QUARTER ENDED JUNE 30,
                                    -----------------------------------------------------------------------------------
                                                        1999                                          1998
                                    --------------------------------------       --------------------------------------
                                        Average                    Average           Average                    Average
                                        Balance     Interest     Yield/Cost          Balance      Interest   Yield/Cost
                                    -------------  ---------    -----------       -----------    ---------   ----------
<S>                                     <C>            <C>            <C>            <C>            <C>            <C>

Assets                                                           (Dollars in thousands)
Interest-earning assets:
    Loans (1)                       $226,268       $   4,190        7.41%         $183,524       $ 3,362         7.33%
    Mortgage-backed securities (2)   105,577           1,675        6.35           111,239         1,862         6.70
    Other securities (2)              36,183             631        6.98            62,835         1,080         6.88
    Other earning assets              11,844             153        5.17             8,199           125         6.10
                                    --------       ---------                      --------       -------
    Total interest-earning assets    379,872       $   6,649        7.00           365,797       $ 6,429         7.03
                                                   =========                                     =======

Allowance for loan losses             (1,467)                                       (1,241)
Non-interest-earning assets           13,061                                         8,000
                                    --------                                      --------
    Total assets                    $391,466                                      $372,556
                                    ========                                      ========
LIABILITIES AND  STOCKHOLDERS'
EQUITY
Interest-bearing liabilities:
    NOW, club and money market      $ 57,772       $     330        2.28%         $ 49,639       $   205         1.65%
     accounts
    Regular savings accounts (3)      49,369             230        1.86            45,000           271         2.41
    Savings certificate accounts     148,168           1,832        4.95           126,008         1,822         5.78
                                    --------       ---------                      --------       -------
     Total interest-bearing          255,309           2,392        3.75           220,647         2,298         4.17
      deposits

    Borrowings                        87,682           1,193        5.44            98,477         1,420         5.77
                                    --------       ---------                      --------       -------
     Total interest-bearing          342,991       $   3,585        4.18           319,124       $ 3,718         4.66
      liabilities                                  =========                                     =======

Non-interest-bearing liabilities       8,422                                        10,352
                                    --------                                      --------
       Total liabilities             351,413                                       329,476

Stockholders' equity                  40,053                                        43,080
                                    --------                                      --------
       Total liabilities and
        stockholders' equity        $391,466                                      $372,556
                                    ========                                      ========
Net interest income                                 $  3,064                                      $ 2,711
                                                    ========                                      =======
Average interest rate spread (4)                                     2.82%                                        2.37%
Net interest margin (5)                                              3.23%                                        2.96%
Net interest-earning assets (6)     $ 36,881                                      $ 46,673
                                    ========                                      ========
Ratio of average interest-earning
assets to average interest-bearing
liabilities                                                        110.75%                                      114.63%
</TABLE>

See footnote explanations on the following page.



<PAGE>
<TABLE>
<CAPTION>
                                                                         FOR THE NINE MONTHS ENDED JUNE 30,
                                                    -------------------------------------------------------------------
                                                                    1999                                1998
                                                    -------------------------------     -------------------------------
                                                      Average                Average      Average               Average
                                                      Balance   Interest     Yield/Cost   Balance   Interest   Yield/Cost
                                                    ---------- ---------     ----------  ---------  --------  -----------
<S>                                                 <C>          <C>            <C>       <C>       <C>            <C>

ASSETS                                                                           (Dollars in thousands)
Interest-earning assets:
    Loans (1)                                       $209,514    $11,734        7.47%     $159,514    $ 9,580       8.01%
    Mortgage-backed securities (2)                   113,007      5,366        6.33       107,317      5,543       6.89
    Other securities (2)                              40,215      2,122        7.04        62,858      3,271       6.94
    Other earning assets                              13,713        520        5.06         7,902        335       5.65
                                                    --------    -------                  --------    -------
       Total interest-earning assets                 376,449    $19,742        6.99       337,591    $18,729       7.40
                                                                =======                              =======

Allowance for loan losses                             (1,400)                              (1,168)
Non-interest-earning assets                            9,861                                6,963
                                                    --------                             --------
       Total assets                                 $384,910                             $343,386
                                                    ========                             ========
LIABILITIES AND  STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
    NOW, club and money market accounts             $ 55,334    $   952        2.29%     $ 46,141    $   630       1.82%
    Regular savings accounts (3)                      47,907        709        1.97        45,083        824       2.44
    Savings certificate accounts                     140,343      5,452        5.18       122,797      5,244       5.69
                                                    --------    -------                  --------    -------
       Total interest-bearing deposits               243,584      7,113        3.89       214,021      6,698       4.17

    Borrowings                                        91,931      3,816        5.53        76,554      3,344       5.82
                                                    --------    -------                  --------    -------
       Total interest-bearing liabilities            335,515    $10,929        4.34       290,575    $10,042       4.61
                                                                =======                              =======

Non-interest-bearing liabilities                       8,716                                8,811
                                                    --------                             --------
       Total liabilities                             344,231                              299,386

Stockholders' equity                                  40,679                               44,000
                                                    --------                             --------
       Total liabilities and stockholders' equity   $384,910                             $343,386
                                                    ========                             ========
Net interest income                                             $ 8,813                             $  8,687
                                                                =======                             ========
Average interest rate spread (4)                                               2.65%                               2.79%
Net interest margin (5)                                                        3.12%                               3.43%
Net interest-earning assets (6)                     $ 40,934                             $ 47,016
                                                    ========                             ========
Ratio of average interest-earning assets to average
    interest-bearing liabilities                                             112.20%                             116.18%
</TABLE>

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

<PAGE>
   The following  table  presents the extent to which changes in interest  rates
and  changes  in the  volume of  interest-earning  assets  and  interest-bearing
liabilities  affected the Company's  interest income and interest expense during
the three and nine months ended June 30, 1999 compared to the same period in the
prior year. Information is provided in each category with respect to (i) changes
attributable to changes in volume (changes in volume  multiplied by prior rate),
(ii) changes  attributable  to changes in rate  (changes in rate  multiplied  by
prior  volume),  and (iii)  the net  change.  The  changes  attributable  to the
combined  impact of volume and rate have been allocated  proportionately  to the
changes due to volume and the changes due to rate.

<TABLE>
<CAPTION>
                                      For the Quarter Ended June 30,    For the Nine Months Ended June 30,
                                           1999 Compared to 1998                1999 Compared to 1998
                                    --------------------------------    ---------------------------------
                                     Increase (Decrease)                  Increase (Decrease)
                                            Due To            Net              Due To              Net
                                    --------------------                ---------------------
                                      Volume      Rate       Change       Volume      Rate        Change
                                    --------    --------    --------    --------    ---------    --------
                                                                 (In thousands)
<S>                                      <C>       <C>       <C>            <C>       <C>           <C>

Interest-earning assets:
  Loans                              $  791      $   37      $ (187)     $ 2,836       $(682)     $ 2,154
  Mortgage-backed securities            (92)        (95)       (187)         286        (463)        (177)
  Other securities                     (465)         16        (449)      (1,195)         46       (1,149)
  Other earning assets                   49         (21)         28          223         (38)         185
                                     ------      ------      ------      -------       -----      -------
             Total                      283         (63)        220        2,150      (1,137)       1,013
                                     ------      ------      ------      -------       -----      -------
Interest-bearing liabilities:
  NOW, club and money market             38          87         125          140         182          322
   accounts
  Regular savings accounts               25         (66)        (41)          50        (165)        (115)
  Savings certificate accounts          293        (283)         10          705        (497)         208
  Borrowings                           (149)        (78)       (227)         645        (173)         472
                                     ------      ------      ------      -------       -----      -------
             Total                      207        (340)       (133)       1,540        (653)         887
                                     ------      ------      ------      -------       -----      -------

Net change in net interest income    $   76      $  277      $  353      $   610        (484)     $   126
                                     ======      ======      ======      =======       =====      =======
</TABLE>

COMPARISON  OF  OPERATING  RESULTS FOR THE THREE  MONTHS  ENDED
JUNE 30, 1999 AND 1998

   GENERAL. Net income for the third fiscal quarter ended June 30, 1999 amounted
to $657,000, or basic earnings per common share of $0.28, compared to net income
of $727,000,  or basic  earnings per common share of $0.28 for the quarter ended
June 30,  1998.  Diluted  earnings  per  common  share was $0.27 for both of the
quarters ended June 30, 1999 and 1998.

   NET  INTEREST  INCOME.  Net  interest  income,  the  primary  contributor  to
earnings,  for the three months ended June 30, 1999  increased  $353,000 to $3.1
million, from $2.7 million for the prior year's quarter. The increase reflects a
rise in the average  interest  rate spread to 2.82% for the three  months  ended
June 30, 1999,  from 2.37% for the prior year's  period,  partially  offset by a
decline in net interest-earning assets (total interest-earning assets less total
interest-bearing  liabilities). The increase in the average interest rate spread
is  primarily  a result of a  decrease  in the cost of funds due to the  current
lower interest rate environment as well as increases in the proportion of assets
consisting of commercial real estate and  multi-family  loans. The Company's net
interest  margin  increased  to 3.23% for the three  months ended June 30, 1999,
from 2.96% a year earlier.
<PAGE>

   INTEREST  INCOME.  Interest and dividend  income totaled $6.6 million for the
three  months  ended June 30,  1999,  an increase  of $220,000  compared to $6.4
million for the three  months ended June 30, 1998.  This  increase  reflects the
effect of a $14.1  million  increase in total  average  interest-earning  assets
slightly  offset by a 3 basis point decrease in the average yield on such assets
to 7.00% for the three months ended June 30, 1999 from 7.03% for the same period
in the prior year.

   Interest income on loans  increased  $828,000 for the three months ended June
30, 1999 compared to the same period in the prior year, reflecting the effect of
a $42.7 million  increase in the average  balance  coupled with an 8 basis point
increase in the average yield.  The increase in the average balance of loans was
primarily attributable to an increase in one-to-four family residential mortgage
loans.  The increase in the average yield on loans is primarily  attributable to
an increase in the proportion of loans consisting of higher yielding  commercial
real estate and multi-family loans.

   On a combined  basis,  interest and dividend  income on  mortgage-backed  and
other securities  decreased  $636,000 to $2.3 million for the three months ended
June 30,  1999 from $2.9  million  for the three  months  ended  June 30,  1998.
Interest on mortgage-backed securities decreased by $186,000,  attributable to a
34 basis  point  decrease in the average  yield,  in addition to a $5.7  million
decrease  in the  average  balance.  Interest  on other  securities  declined by
$450,000,  primarily  attributable  to a $26.7  million  decrease in the average
balance.

   Interest and dividend  income on other earning  assets  increased by $28,000,
primarily  attributable  to a $3.6  million  increase  in the  average  balance,
partially offset by a 93 basis point decrease in the average yield.

   INTEREST EXPENSE.  Interest expense totaled $3.6 million for the three months
ended June 30,  1999,  a decrease of  $133,000  from the prior  year's  quarter.
Interest  expense on deposits  increased  $94,000 compared to the same period in
the prior  year,  reflecting  the  effect of an $34.7  million  increase  in the
average  balance  partially  offset by a 42 basis point  decrease in the average
rate on  interest-bearing  deposits to 3.75% for the three months ended June 30,
1999 from 4.17% for the three months  ended June 30,  1998.  The decrease in the
average rate on  interest-bearing  deposits primarily reflects the current lower
interest  rate  environment.  In  particular,  the average  rate paid on savings
certificate  accounts  declined  during  this  period  by 83 basis  points.  The
increase  in average  interest-bearing  deposits  consisted  of a $22.2  million
increase in average savings certificate  accounts (to $148.2 million from $126.0
million), a $8.1 million increase in average NOW, club and money market accounts
(to $57.8  million from $49.6  million)  and a $4.4 million  increase in average
regular savings accounts (to $49.4 million from $45.0 million).
<PAGE>

   Interest  expense on  borrowings  decreased  $227,000 to $1.2 million for the
three  months  ended June 30, 1999 from $1.4  million for the three months ended
June 30,  1998.  Total  borrowings  averaged  $87.7  million  (borrowings  under
securities repurchase agreements represented $71.0 million) for the three months
ended  June 30,  1999 at an  average  rate of 5.44%  compared  to $98.5  million
(borrowings under securities  repurchase  agreements  represented $91.9 million)
and 5.77%,  respectively,  for the  prior-year's  quarter.  The majority of this
increase was attributable to interest on borrowings under securities  repurchase
agreements.  See "Liquidity and Capital  Resources" for a further  discussion of
the Company's securities repurchase agreements.

   PROVISION FOR LOAN LOSSES. The provision in each period reflects management's
evaluation of the adequacy of the allowance for loan losses.  Factors considered
include the volume and type of lending  conducted,  the Company's  previous loan
loss  experience,  the known and inherent risks in the loan  portfolio,  adverse
situations that may affect the borrowers'  ability to repay, the estimated value
of any underlying collateral, and current economic conditions. The provision for
loan losses was $50,000 and $75,000 for the three months ended June 30, 1999 and
1998, respectively. Net loan charge-offs were $14,000 for the three months ended
June 30,  1999,  compared  to net loan  charge-offs  of $56,000  during the same
period in 1998.  Non-performing  loans  totaled  $706,000  at June 30,  1999,  a
decline  from  $753,000 at September  30, 1998 and up from  $299,000 at June 30,
1998.   See  "Asset   Quality"  for  a  further   discussion  of  the  Company's
non-performing assets and allowance for loan losses.

   NON-INTEREST INCOME.  Non-interest income for the three months ended June 30,
1999 decreased $260,000 to $274,000,  from $534,000 for the comparable period in
1998.  The  decrease is primarily  attributable  to decreases in the net gain on
sales of loans held for sale and the net gain on sales of securities,  partially
offset by increased  income from service  charges and fees.  Mortgage loans sold
during the three months ended June 30, 1999  amounted to $4.9 million  resulting
in net gains of $32,000,  as compared to loan sales of $7.4  million  during the
three  months  ended June 30, 1998 which  resulted  in net gains of $79,000.  In
addition,  a provision  for losses on loans held for sale of $97,000 was charged
to net gain on sales of loans for the quarter  ended June 30, 1999 in accordance
with SFAS No. 65 "Accounting for Certain  Mortgage  Banking  Activities,"  which
requires loans held-for-sale to be carried at the lower of cost or market value.
No such  provisions  were  made in the  1998  quarter.  Net  gain  on  sales  of
securities  amounted  to $25,000  for the three  months  ended June 30,  1999 as
compared to $195,000 for the June 30, 1998  quarter.  The increase of $56,000 in
service  charges and fee income  primarily  reflects  increases  in  transaction
volume.

   NON-INTEREST EXPENSE. Non-interest expense increased $310,000 to $2.3 million
for the three months ended June 30, 1999, compared to $2.0 million for the three
months ended June 30, 1998. Compensation and benefits expense increased $183,000
from the  prior-year  quarter  primarily  due to  increased  costs  relating  to
additional  staffing in the two  in-store  branches  opened in October  1998 and
April 1999 and the loan  department  expansion,  coupled with  performance-based
increases for certain staff  members.  The increases of $67,000 in occupancy and
equipment expense and $59,000 in other  non-interest  expense primarily reflects
increased costs associated with the  establishment of the two in-store  branches
and a lending center in November 1998.

   INCOME TAX  EXPENSE.  Income tax expense was  approximately  $369,000 for the
three months ended June 30, 1999 and  $491,000 for the  comparable  1998 period,
reflecting  lower  pre-tax  income and  effective  tax rates of 36.0% and 40.3%,
respectively.  The decrease in the  effective  tax rate  reflects the  ancillary
benefits from the  aforementioned  REIT. Under current law, all income earned by
the REIT is distributed to the Association in the form of a dividend and has the
effect of reducing the Company's New York State income tax expense.

COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998

   GENERAL.  Net income for the nine months ended June 30, 1999 amounted to $2.0
million or basic earnings per common share of $0.82, compared to $2.2 million or
basic  earnings  per common  share of $0.84 for the nine  months  ended June 30,
1998.  Diluted  earnings  per common  share were $0.81 for the nine months ended
June 30,  1999  compared  to $0.82  for the same  period in 1998.  The  $232,000
decrease in net income was attributable to an $846,000  increase in non-interest
expense,  partially  offset by a $126,000  increase in net  interest  income,  a
$71,000  increase  in  non-interest  income,  a $292,000  decrease in income tax
expense and a $125,000 decrease in the provision for loan losses.

   NET INTEREST  INCOME.  Net interest income for the nine months ended June 30,
1999  amounted to $8.8  million as compared to $8.7  million for the nine months
ended June 30, 1998. The increase  reflects a higher volume of  interest-earning
assets,  offset by the decline in the average  interest rate spread to 2.65% for
the nine months ended June 30, 1999, from 2.79% for the prior year's period. The
decline in the average  interest  rate  spread  primarily  reflects  lower asset
yields from the origination of new mortgage loans  (including  refinancings)  in
the current lower interest rate  environment.  The Company's net interest margin
decreased to 3.12% for the nine months  ended June 30,  1999,  from 3.43% a year
earlier.
<PAGE>

   INTEREST  INCOME.  Interest and dividend income totaled $19.7 million for the
nine months ended June 30, 1999,  an increase of $1.0 million  compared to $18.7
million for the nine months  ended June 30,  1998.  This  increase  reflects the
effect of a $38.9  million  increase in total  average  interest-earning  assets
partially  offset by a 41 basis  point  decrease  in the  average  yield on such
assets to 6.99% for the nine months  ended June 30, 1999 from 7.40% for the same
period in the prior year.

   Interest  income on loans  increased  $2.2  million for the nine months ended
June 30, 1999  compared to the same  period in the prior  year,  reflecting  the
effect of a $50.0 million increase in the average balance  partially offset by a
54 basis  point  decrease  in the  average  yield.  The  increase in the average
balance of loans was primarily attributable to an increase in one-to-four family
residential  mortgage  loans.  The lower average yield reflects the repricing of
adjustable  rate mortgage loans and the  origination of new loans in the current
low interest rate environment.

   On a combined  basis,  interest and dividend  income on  mortgage-backed  and
other  securities  decreased  $1.3  million to $7.5  million for the nine months
ended June 30, 1999 from $8.8  million for the nine months  ended June 30, 1998.
Interest on mortgage-backed  securities  decreased by $178,000,  attributable to
the effects of a 56 basis point decrease in the average yield  partially  offset
by a $5.7  million  increase in the  average  balance,  while  interest on other
securities declined by $1.1 million,  primarily  attributable to a $22.6 million
decrease in the average balance.

   Interest and dividend  income on other  earning  assets  increased  $185,000,
primarily  attributable  to a  $5.8  million  increase  in the  average  balance
partially offset by a 58 basis point decrease in the average yield.

   INTEREST EXPENSE.  Interest expense totaled $10.9 million for the nine months
ended June 30, 1999,  an increase of $887,000 from the prior year's nine months.
Interest expense on deposits  increased  $415,000 compared to the same period in
the prior  year,  reflecting  the  effect of an $29.6  million  increase  in the
average  balance  partially  offset by a 28 basis point  decrease in the average
rate on  interest-bearing  deposits to 3.89% for the nine months  ended June 30,
1999 from 4.17% for the nine months  ended June 30,  1998.  The  decrease in the
average rate on  interest-bearing  deposits primarily reflects the current lower
interest  rate  environment.  In  particular,  the average  rate paid on savings
certificate  accounts  declined  during  this  period  by 51 basis  points.  The
increase  in average  interest-bearing  deposits  consisted  of a $17.5  million
increase in average savings certificate  accounts (to $140.3 million from $122.8
million), a $9.2 million increase in average NOW, club and money market accounts
(to $55.3  million from $46.1  million)  and a $2.8 million  increase in average
regular savings accounts (to $47.9 million from $45.1 million).

   Interest  expense on  borrowings  increased  $472,000 to $3.8 million for the
nine months ended June 30, 1999 from $3.3 million for the nine months ended June
30, 1998. Total borrowings averaged $91.9 million for the nine months ended June
30,  1999 at an  average  rate of 5.53%  compared  to $76.6  million  and 5.82%,
respectively,  for the prior-year's  period.  Substantially all of this increase
was  attributable  to  interest  on  borrowings   under  securities   repurchase
agreements.  See "Liquidity and Capital  Resources" for a further  discussion of
the Company's securities repurchase agreements.
<PAGE>

   PROVISION FOR LOAN LOSSES. The provision in each period reflects management's
evaluation of the adequacy of the allowance for loan losses.  Factors considered
include the volume and type of lending  conducted,  the Company's  previous loan
loss  experience,  the known and inherent risks in the loan  portfolio,  adverse
situations that may affect the borrowers'  ability to repay, the estimated value
of any underlying collateral, and current economic conditions. The provision for
loan losses was  $200,000  and  $325,000 for the nine months ended June 30, 1999
and 1998,  respectively.  The higher provision in the nine months ended June 30,
1998 reflected the impact of higher net charge-offs  which were $156,000 for the
period,  compared  to of $13,000 for the nine months  ended June 30,  1999.  See
"Asset Quality" for a further discussion of the Company's  non-performing assets
and allowance for loan losses.

   NON-INTEREST  INCOME.  For the nine months ended June 30, 1999,  non-interest
income  increased  $71,000 to $1.2 million compared to $1.1 million for the same
period in the prior year.  Mortgage loans sold during the nine months ended June
30, 1999  amounted  to $34.2  million  resulting  in net gains of  $278,000,  as
compared to loan sales of $42.6  million  during the nine months  ended June 30,
1998 which  resulted in net gains of  $273,000.  In  addition,  a provision  for
losses on loans  held for sale of  $97,000  was  charged to net gain on sales of
loans for the quarter ended June 30, 1999, no such  provisions  were made in the
1998 period.  Net gain on sales of  securities  amounted to $98,000 for the nine
months   ended   June  30,   1999   reflecting   sales  of  $17.5   million   in
available-for-sale  securities during the period,  compared to gains of $143,000
on sales of $6.7  million in the prior  year's  period.  The increase in service
charges and fee income primarily reflects increases in transaction volume.

NON-INTEREST  EXPENSE.  Non-interest  expense increased $846,000 to $6.6 million
for the nine months  ended June 30, 1998  compared to $5.8  million for the same
period in the prior year. The current year increases are primarily  attributable
to increases in  compensation  and benefits  expense and occupancy and equipment
expense.  Compensation  and benefits  expense for the nine months ended June 30,
1999  increased  $487,000 from the prior year  primarily due to increased  costs
relating to  additional  staffing in the three  in-store  branches  and the loan
department expansion, coupled with performance-based increases for certain staff
members.  The increase of $183,000 in occupancy  and  equipment  expense for the
nine months ended June 30, 1999 primarily  reflects  increased costs  associated
with the establishment of three in-store branches,  one in December 1997, one in
October  1998 and one in April  1999,  in  addition  to the  establishment  of a
lending center in November 1998. Included in other non-interest  expense for the
nine  months  ended June 30,  1999 were  expenses  of  $105,000  relating to the
establishment of the REIT.

    INCOME TAX  EXPENSE.  Income tax expense for the nine months  ended June 30,
1999 was  approximately  $1.2 million and $1.5 million for the  comparable  1998
period,  reflecting  lower  pre-tax  income and effective tax rates of 38.1% and
40.6%,  respectively.  The  decrease  in the  effective  tax rate  reflects  the
ancillary benefits from the aforementioned REIT.

ASSET QUALITY

   Non-performing  loans  totaled  $706,000  at June 30,  1999,  a decline  from
$753,000 at September 30, 1998 and up from $299,000 at June 30, 1998.  The ratio
of  non-performing  loans to total loans  receivable was 0.32% at June 30, 1999,
compared  to 0.41%  at  September  30,  1998 and  0.16%  at June 30,  1998.  The
allowance for loan losses was $1.5 million or 0.67% of total loans receivable at
June 30, 1999,  compared to $1.3 million or 0.70% of total loans  receivable  at
September 30, 1998 and $1.3 million or 0.69% at June 30, 1998.  The ratio of the
allowance for loan losses to non-performing  loans was 210.91% at June 30, 1999,
compared to 172.91% at September 30, 1998 and 422.07% at June 30, 1998.
<PAGE>

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

<TABLE>
<CAPTION>
                                                    June 30,      September 30,   June 30,
                                                      1999            1998          1998
                                                    --------      -------------   --------
                                                                (Dollars in Thousands)
<S>                                                    <C>            <C>            <C>
 Non-accrual loans past due ninety days or more:
   Real estate mortgage loans:
     One- to four-family                               406             515                74
        Commercial                                     198             203               204
    Consumer loans                                     102              35                21
                                                    ------          ------            ------
         Total                                         706             753               299
Real estate owned, net                                 183             305               305
                                                    ------          ------            ------
         Total non-performing assets                $  889          $1,058            $  604
                                                    ======          ======            ======
         Allowance for loan losses $                $1,489          $1,302            $1,262
                                                    ======          ======            ======
         Ratios:
         Non-performing loans to total loans          0.32%           0.41%             0.16%
          receivable
         Non-performing assets to total assets        0.23            0.28              0.15
         Allowance for loan losses to:
             Non-performing loans                   210.91          172.91            422.07
             Total loans receivable                   0.67            0.70              0.69


</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

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

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

   The  Association  is required to maintain an average  daily  balance of total
liquid  assets  as a  percentage  of  net  withdrawable  deposit  accounts  plus
short-term  borrowings,  as defined by the  regulations  of the Office of Thrift
Supervision. The minimum required liquidity ratio at June 30, 1999 was 4.0%, and
the Company's actual liquidity ratio was 8.72%.

    The primary investing  activities of the Company are the origination of real
estate mortgage and other loans, and the purchase of  mortgage-backed  and other
securities.  At June 30,  1999,  the Company had  outstanding  loan  origination
commitments  of $38.6  million,  unadvanced  home equity lines of credit of $2.1
million and undisbursed  construction loans in process of $537,000.  The Company
anticipates  that it will have  sufficient  funds  available to meet its current
loan  origination and other  commitments.  At June 30, 1999, the Company had the
ability to obtain  additional  FHLB  advances of  approximately  $78.5  million.
Certificates  of deposit  scheduled  to mature in one year or less from June 30,
1999 totaled $109.8 million.  Based on the Company's most recent  experience and
pricing  strategy,  management  believes  that a  significant  portion  of  such
deposits will remain with the Company.

   The  Company's  borrowings  at June 30, 1999  consisted  of $71.0  million in
borrowings  under  securities  repurchase  agreements and FHLB advances of $19.0
million.  FHLB advances at June 30, 1999 had a weighted average interest rate of
5.45% and a  weighted  average  term to  maturity  of 7.4 years  with a weighted
average term to call date of 1.1 years. In the securities repurchase agreements,
the Company borrows funds through the transfer of debt securities to the FHLB of
New York, as counterparty,  and concurrently  agrees to repurchase the identical
securities at a fixed price on a specified date. The Company  accounts for these
agreements  as  secured  financing  transactions  since it  maintains  effective
control over the transferred securities.  Accordingly,  the transaction proceeds
are recorded as borrowings and the underlying  securities continue to be carried
in  the  Company's  debt  securities   portfolio.   Repurchase   agreements  are
collateralized  by the  securities  sold and, in certain  cases,  by  additional
margin  securities.  During the nine  months  ended June 30,  1999,  the average
borrowings  under these  agreements  amounted  to $78.7  million and the maximum
month-end balance outstanding was $103.8 million.
<PAGE>

   Additional  information concerning outstanding repurchase agreements with the
FHLB of New York as of June 30, 1999 is summarized as follows:

<TABLE>
<CAPTION>
                        REPURCHASE BORROWINGS
----------------------------------------------------------------------
                                                    Accrued     Weighted    Fair Value
                                                    Interest    Average     of Collateral
Remaining Term to Final Maturity(1)     Amount      Payable(2)   Rate       Securities(3)
-----------------------------------    --------    -----------  ---------   -------------
                             (Dollars in thousands)
<S>                                      <C>           <C>       <C>            <C>
After 30 days but within one year     $ 5,000      $      258     5.74%      $ 5,514
After one but within three years       20,600              97     5.91        25,504
After three but within five years      15,000              98     5.65        15,360
After five years                       30,412             203     5.47        28,373
                                      -------      ----------                -------

     Total                            $71,012      $      656     5.66%      $74,751
                                      =======      ==========                =======

</TABLE>
(1)  The weighted average remaining term to final maturity was approximately 4.8
     years  at June 30,  1999.  Certain  securities  repurchase  agreements  are
     callable by the FHLB of New York,  prior to the maturity date. The weighted
     average  remaining  term to maturity,  giving effect to earlier call dates,
     was approximately 1.7 years at June 30, 1999.

(2)  Included in other liabilities in the consolidated balance sheet.

(3)  Represents the fair value of the mortgage-backed securities ($55.8 million)
     and other debt  securities  ($18.9  million) which were  transferred to the
     counterparty,  including  accrued  interest  receivable of $643,000.  These
     securities consist of  available-for-sale  securities and  held-to-maturity
     securities   with  fair  values  of  $67.5   million   and  $7.2   million,
     respectively.

   At June 30, 1999, the Company's "amount at risk" under securities  repurchase
agreements was approximately $3.1 million.  This amount represents the excess of
(i)  the  carrying  amount,  or  market  value  if  higher,  of  the  securities
transferred to the FHLB of New York plus accrued  interest  receivable over (ii)
the amount of the repurchase liability plus accrued interest payable.

   At June 30, 1999,  the  Association  exceeded all of its  regulatory  capital
requirements  with a tangible  capital level of 9.51% of total adjusted  assets,
which is above  the  required  level of  1.5%;  core  capital  of 9.51% of total
adjusted assets, which is above the required level of 4.0%; and total risk-based
capital of 24.53%,  which is above the required level of 8.0%.  These regulatory
capital  requirements,  which are  applicable  to the  Association  only, do not
consider  additional  capital  held at the Holding  Company  level,  and require
certain  adjustments to  stockholder's  equity to arrive at the various  capital
amounts.
<PAGE>

YEAR 2000 CONSIDERATIONS

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

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

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

      The Company has  established  and is  implementing a Year 2000 Action Plan
(the  "Plan")  to  address  the Year  2000  Issue.  The Plan  includes  the five
components as recommended by the OTS, which address issues involving  awareness,
assessment, renovation, validation and implementation. The Company has completed
the awareness and assessment phases of the Plan.

   Under the regulatory guidelines previously mentioned, testing of core mission
critical internal systems must have been substantively completed by December 31,
1998 and testing with service providers must have been  substantively  completed
by June 30, 1999. All renovations must be substantially complete, and testing of
mission  critical  systems must be  completed,  by June 30, 1999. As of June 30,
1999, the Company substantially  completed testing its internal mission critical
systems and testing with its primary service provider, which provides almost all
of the Company's data processing.
<PAGE>

   As  part  of the  Plan,  the  Company  is in  communication  with  all of its
significant  suppliers  and vendors to determine the extent to which the Company
is vulnerable to those third parties'  failure to remediate  their own Year 2000
Issue.  The  Company  presently  believes  that with  modifications  to existing
software and conversions to new software,  the Year 2000 Issue will be mitigated
without  causing a material  adverse  impact on the  operations  of the Company.
However,  if  such  modifications  and  conversions  are  not  made,  or are not
completed timely,  the Year 2000 Issue could have an impact on the operations of
the Company.

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

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

   Monitoring and managing the Year 2000 Issue will result in additional  direct
and indirect  costs to the Company.  Direct costs include  potential  charges by
third-party software vendors for product enhancements, costs involved in testing
software  products  for  Year  2000  compliance,  and any  resulting  costs  for
developing and implementing  contingency  plans for critical  software  products
which are not  enhanced.  Indirect  costs will  principally  consist of the time
devoted by existing  employees in monitoring  software vendor progress,  testing
enhanced  software  products and implementing any necessary  contingency  plans.
Based on the  current  status  of the  Company's  Year 2000  efforts,  the costs
associated  with identified Year 2000 issues are not expected to have a material
effect on the results of operations or financial condition of the Company. Costs
incurred through June 30, 1999 were  approximately  $138,000.  This includes Y2K
remediation  efforts and planned system upgrades related to business  expansion.
Approximately $50,000 of this cost was recognized in the nine-month period ended
June 30, 1999.  Management  currently  estimates that remaining costs will range
between  $5,000 and $40,000,  most of which will be  recognized in calendar year
1999.

PART I. ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

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

ITEM 2.  CHANGES IN SECURITIES

   None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

   None

<PAGE>


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

   None

ITEM 5.  OTHER INFORMATION

    None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

   (a)  Exhibits

        EXHIBIT NO.                                           NAME
           27                                          Financial Data Schedule

   (b)  Reports on Form 8-K

    None
<PAGE>
                                   SIGNATURES

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

                                                   YONKERS FINANCIAL CORPORATION
                                                             (Registrant)


Date:  August 6, 1999                              /s/  RICHARD F. KOMOSINSKI
       --------------                              --------------------------
                                                   Richard F. Komosinski
                                                   President and
                                                   Chief Executive Officer
                                                   (Principal Executive Officer)


Date:  August 6, 1999                              /s/  JOSEPH D. ROBERTO
       --------------                              --------------------------
                                                   Joseph D. Roberto
                                                   Vice President, Treasurer and
                                                   Chief Financial Officer
                                                   (Principal Financial Officer)