SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 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 December 31, 2002
                                       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 000-24811

                           SOUND FEDERAL BANCORP, INC.
             (Exact name of registrant as specified in its charter)

          Delaware                                              22-3887679
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              Identification No.)

                 300 Mamaroneck Ave., Mamaroneck, New York 10543
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (914) 698-6400
               (Registrant's telephone number including area code)

                                      N/A
              (Former name, former address and former fiscal year,
                          if changed from last Report)

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

     Indicate  by check mark  whether the  registrant  is an  accelerated  filer
pursuant to Rule 12(b)-2 of the Securities  Exchange Act of 1934.
 Yes _____ No X
            ------

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

                                                             Shares
                                                        Outstanding at
           Class                                      February 12, 2003
       --------------                                -------------------
        Common Stock,                                    13,225,000
        par value, $0.10


<PAGE>


                                TABLE OF CONTENTS


                         PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

  Consolidated Balance Sheets at December 31, 2002 and March 31, 2002..........1

  Consolidated Statements of Income for the Quarter and Nine Months
  Ended December 31, 2002 and 2001.............................................2

  Consolidated Statement of Changes in Stockholders' Equity for the Nine Months
  Ended December 31, 2002......................................................3

  Consolidated Statements of Cash Flows for the Nine Months
  Ended December 31, 2002 and 2001.............................................4

  Notes to Unaudited Consolidated Financial Statements.........................5

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

Item 3.  Quantitative and Qualitative Disclosures about Market Risk...........16

Item 4.   Controls and Procedures.............................................16

                          PART II -- OTHER INFORMATION

Item 1.  Legal Proceedings....................................................17

Item 2.  Changes in Securities and Use of Proceeds............................17

Item 3.  Defaults upon Senior Securities......................................17

Item 4.  Submission of Matters to a Vote of Security Holders..................17

Item 5.  Other Information....................................................17

Item 6.  Exhibits and Reports on Form 8-K.....................................17

         Signatures...........................................................18


         Certification  of Chief Executive  Officer  Pursuant to Section
         302 of the Sarbanes-Oxley Act of 2002................................19

         Certification  of Chief Financial  Officer  Pursuant to Section
         302 of the Sarbanes-Oxley Act of 2002................................20

<PAGE>




Part 1. - Financial Information
Item 1.  Financial Statements


<TABLE>
<CAPTION>

Sound Federal Bancorp and Subsidiary
Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands)                                                                  December 31,           March 31,
                                                                                  --------------------------------------------
                                                                                            2002                  2002
                                                                                  --------------------------------------------

Assets
<S>                                                                                              <C>                  <C>
Cash and due from banks                                                                   $ 9,801              $ 6,931
Federal funds sold and other overnight deposits                                            85,058               19,847
                                                                                        ---------            ---------
   Total cash and cash equivalents                                                         94,859               26,778
                                                                                        ---------            ---------
Securities available for sale, at fair value (including $37,079 and $35,779
   pledged as collateral for borrowings under repurchase agreements at
   December 31, 2002 and March 31, 2002, respectively)                                    221,815              150,231
Loans, net:
  Mortgage loans                                                                          434,988              419,120
  Consumer loans                                                                            1,574                1,469
  Allowance for loan losses (Note 4)                                                       (2,396)              (2,221)
                                                                                        ---------            ---------
            Total loans, net                                                              434,166              418,368
                                                                                        ---------            ---------

 Accrued interest receivable                                                                3,505                3,241
 Federal Home Loan Bank stock                                                               4,141                4,141
 Premises and equipment, net                                                                5,468                5,459
 Goodwill                                                                                  13,970               13,970
 Other assets                                                                               1,541                1,797
                                                                                        ---------            ---------
            Total assets                                                                $ 779,465            $ 623,985
                                                                                        =========            =========

Liabilities and Stockholders' Equity
Liabilities:
  Deposits                                                                              $ 592,417            $ 519,905
  Borrowings (Note 5)                                                                      34,973               34,922
  Mortgagors' escrow funds                                                                  5,574                5,021
  Stock subcription proceeds                                                               68,134                    -
  Due to brokers for securities purchased                                                   6,195                    -
  Accrued expenses and other liabilities                                                    3,926                3,122
                                                                                         --------             --------
            Total liabilities                                                             711,219              562,970
                                                                                         --------             --------
Stockholders' equity (Note 1):
   Preferred stock ($0.10 par value; 10,000,000 shares authorized;
      none issued and outstanding)                                                              -                    -
   Common stock ($0.10 par value; 20,000,000 shares authorized; 5,223,218 and
      5,220,218 shares issued at December 31, 2002 and March 31, 2002,
      respectively)                                                                           522                  522
   Additional paid-in capital                                                              22,756               22,525
   Treasury stock, at cost (444,926 shares)                                                (4,350)              (4,350)
   Common stock held by Employee Stock Ownership Plan ("ESOP")                               (961)              (1,105)
   Common stock awards under the Recognition and Retention Plan ("RRP")                      (136)                (244)
   Retained earnings                                                                       48,292               42,566
   Accumulated other comprehensive income, net of taxes (Note 6)                            2,123                1,101
                                                                                         --------              -------
            Total stockholders' equity                                                     68,246               61,015
                                                                                         --------              -------
            Total liabilities and stockholders' equity                                   $779,465             $623,985
                                                                                         ========             ========
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

                                      1
<PAGE>



Sound Federal Bancorp and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
                                                             For the Quarter Ended      For the Nine Months Ended
                                                         ----------------------------------------------------------------
                                                               December 31,                          December 31,
                                                         -----------------------            -----------------------------
                                                                2002            2001             2002              2001
                                                               -------         -------         -------            -------
Interest and Dividend Income
<S>                                                            <C>             <C>             <C>              <C>
 Loans                                                         $ 7,527         $ 6,544         $ 22,767         $ 18,627
 Mortgage-backed and other securities                            2,130           2,651            6,177            8,747
 Federal funds sold and other overnight deposits                   158             234              390              728
 Other earning assets                                               55              16              139              172
                                                               -------         -------         --------         --------
 Total interest and dividend income                              9,870           9,445           29,473           28,274
                                                               -------         -------         --------         --------
Interest Expense
 Deposits                                                        3,025           4,393            9,211           14,130
 Borrowings                                                        409             241            1,236              767
 Other interest-bearing liabilities                                 38              16               75               53
                                                               -------         -------         --------         --------
 Total interest expense                                          3,472           4,650           10,522           14,950
                                                               -------         -------         --------         --------
 Net interest income                                             6,398           4,795           18,951           13,324
 Provision for loan losses (Note 4)                                 50              75              175              125
                                                               -------         -------         --------         --------
 Net interest income after provision for loan losses             6,348           4,720           18,776           13,199
                                                               -------         -------         --------         --------

Non-Interest Income
 Service charges and fees                                          229             167              610              475
 Gain on sale of real estate owned                                   -              27               13               84
                                                               -------         -------         --------         --------
 Total non-interest income                                         229             194              623              559
                                                               -------         -------         --------         --------

Non-Interest Expense
 Compensation and benefits                                       1,650           1,205            4,701            3,681
 Occupancy and equipment                                           495             441            1,324            1,134
 Data processing service fees                                      237             273              724              680
 Advertising and promotion                                         328             109              754              418
 Other                                                             620             507            1,879            1,377
                                                               -------         -------         --------         --------
 Total non-interest expense                                      3,330           2,535            9,382            7,290
                                                               -------         -------         --------         --------

 Income before income tax expense                                3,247           2,379           10,017            6,468
 Income tax expense                                              1,220             914            3,799            2,456
                                                               -------         -------         --------         --------
 Net income                                                    $ 2,027         $ 1,465          $ 6,218          $ 4,012
                                                               =======         =======         ========         ========
Basic earnings per share (Note 3)                               $ 0.43          $ 0.32           $ 1.33           $ 0.87
                                                               =======         =======         ========         ========
Diluted earnings per share (Note 3)                             $ 0.42          $ 0.31           $ 1.30           $ 0.86
                                                               =======         =======         ========         ========

</TABLE>

See accompanying notes to unaudited consolidated financial statements.

                                       2
<PAGE>



Sound Federal Bancorp and Subsidiary
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Nine Months Ended December 31, 2002
(Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>

                                                                                               Common        Common
                                                                  Additional                   Stock         Stock
                                                       Common       Paid-In      Treasury     Held By        Awards       Retained
                                                        Stock       Capital       Stock         ESOP       Under RRP      Earnings
<S>              <C> <C>                                   <C>       <C>          <C>           <C>             <C>        <C>
Balance at March 31, 2002                                  $ 522     $ 22,525     $ (4,350)     $ (1,105)       $ (244)    $ 42,566
Net income                                                     -            -            -             -             -        6,218
Other comprehensive income (Note 6)                            -            -            -             -             -            -

  Total comprehensive income
Dividends paid ($0.25 per share)                               -            -            -             -             -         (492)
Issuance of stock pursuant to stock option plan                -           27            -             -             -            -
Vesting of RRP shares                                          -            -            -             -           108            -
ESOP shares committed to be released for
    allocation                                                 -          204            -           144             -            -
                                                     ------------ ------------  ----------- ------------- -------------  -----------
Balance at December 31, 2002                               $ 522     $ 22,756     $ (4,350)       $ (961)       $ (136)    $ 48,292
                                                     ============ ============  =========== ============= =============  ===========

</TABLE>

See accompanying notes to unaudited consolidated financial statements.


                                                      Accumulated
                                                       Other             Total
                                                   Comprehensive   Stockholders'
                                                      Income            Equity
Balance at March 31, 2002                            $ 1,101         $ 61,015
Net income                                                 -            6,218
Other comprehensive income (Note 6)                    1,022            1,022
                                                                    -----------
  Total comprehensive income                                            7,240
Dividends paid ($0.25 per share)                           -             (492)
Issuance of stock pursuant to stock option plan            -               27
Vesting of RRP shares                                      -              108
ESOP shares committed to be released for
    allocation                                             -              348
                                                     ----------     ------------
Balance at December 31, 2002                         $ 2,123         $ 68,246
                                                     ==========     ============


                                       3
<page>


<TABLE>
<CAPTION>

Sound Federal Bancorp and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)                                                                                   For the Nine Months Ended
(In thousands)                                                                                       December 31,
                                                                                           ------------------------------
                                                                                               2002               2001
                                                                                           ------------        ----------
OPERATING ACTIVITIES
<S>                                                                                         <C>                   <C>
  Net income                                                                                $ 6,218               $ 4,012
  Adjustments to reconcile net income to net cash provided
      by operating activities:
  Provision for loan losses                                                                     175                   125
  Depreciation, amortization and accretion                                                    1,035                  (613)
  ESOP and RRP expense                                                                          394                   287
  Income taxes                                                                                   19                 2,331
  Gain on sale of real estate owned                                                             (13)                  (84)
  Other adjustments, net                                                                        467                   213
                                                                                          ----------            ---------
           Net cash provided by operating activities                                          8,295                 6,271
                                                                                          ----------            ---------

INVESTING ACTIVITIES
  Purchases of securities available for sale                                               (127,045)              (37,879)
  Proceeds from principal payments, maturities and calls of
      securities available for sale                                                          63,229                69,703
  Disbursements for loan originations, net of principal repayments                          (16,639)              (63,640)
  Net decrease in certificates of deposit                                                         -                 2,491
  Proceeds from sales of real estate owned                                                      127                   400
  Purchases of premises and equipment                                                          (538)                 (111)
                                                                                          ----------            ---------
          Net cash used in investing activities                                             (80,866)              (29,036)
                                                                                          ----------            ---------


FINANCING ACTIVITIES
  Net increase in deposits                                                                   72,512                35,261
  Net increase in mortgagors' escrow funds                                                      553                   542
  Repayment of borrowings                                                                       (82)                    -
  Increase in stock subscription proceeds                                                    68,134                     -
  Issuance of stock pursuant to stock option plan                                                27                     -
  Purchases of treasury stock                                                                     -                  (483)
  Dividends paid on common stock                                                               (492)                 (377)
                                                                                          ----------            ---------
          Net cash provided by financing activities                                         140,652                34,943
                                                                                          ----------            ---------

  Increase in cash and cash equivalents                                                      68,081                12,178
  Cash and cash equivalents at beginning of period                                           26,778                40,849
                                                                                          ----------            ---------
  Cash and cash equivalents at end of period                                               $ 94,859              $ 53,027
                                                                                          ==========            =========
SUPPLEMENTAL INFORMATION
Interest paid                                                                              $ 10,459              $ 14,918
Income taxes paid (received)                                                                  2,316                   (63)
Non-cash investing activities:
   Loans transferred to real estate owned                                                       171                   253
   Increase in due to brokers for securities purchased                                        6,195                     -
                                                                                          ==========             =========

</TABLE>

See accompanying notes to unaudited consolidated financial statements.
                                       4

<page>

Sound Federal Bancorp and Subsidiary

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.       Reorganization and Stock Offerings

     On October 8, 1998, Sound Federal Bancorp issued shares of its common stock
in connection with a Plan of Reorganization ("the  "Reorganization") and related
Subscription and Community  Offering (the  "Offering").  In the  Reorganization,
Sound Federal Savings and Loan Association  converted from a federally chartered
mutual savings  association to a federally  chartered stock savings  association
(the  "Conversion").  Sound  Federal  Savings  and Loan  Association  became the
wholly-owned   subsidiary   of  Sound   Federal   Bancorp,   which   became  the
majority-owned subsidiary of Sound Federal, MHC (the "Mutual Holding Company").

     Sound  Federal  Bancorp  issued a total of  5,212,218  shares of its common
stock in the  Reorganization  and Offering,  consisting of 2,810,510  shares (or
53.92%)  issued to the Mutual Holding  Company and 2,401,708  shares (or 46.08%)
issued to other  stockholders.  After deducting  offering costs of $1.1 million,
the net cash proceeds from the Offering were $20.0 million.

     On June 13, 2002, the Mutual Holding Company adopted a plan to convert to a
capital stock corporation. The conversion was completed on January 6, 2003. Upon
conversion, shares of Sound Federal Bancorp common stock held by the public were
exchanged for shares of Sound Federal Bancorp, Inc., a Delaware holding company,
which became the parent  company of Sound Federal  Savings (the "Bank") (as part
of the transaction,  Sound Federal Savings and Loan Association changed its name
to Sound Federal Savings).  In addition,  shares of Sound Federal Bancorp,  Inc.
were  offered  for sale to the Bank's  depositors  and  certain  borrowers  in a
subscription  offering.  The shares sold in the subscription  offering represent
the ownership interest of the Mutual Holding Company.

     Sound Federal Bancorp, Inc. sold 7,780,737 shares of common stock at $10.00
per share in the  offering  completed  on  January 6, 2003.  In  addition,  each
outstanding  share of common stock of Sound Federal  Bancorp was converted  into
2.7667  shares of the new  corporation  resulting  in the  issuance of 5,444,263
shares.  A total of  13,225,000  shares are now  outstanding  as a result of the
offering and share  exchange.  Net cash proceeds  from the offering  amounted to
$70.1 million,  including $5.1 million  withdrawn from deposit  accounts to fill
subscriptions.

2.       Basis of Presentation

     The  presentation  contained  in this  Form  10-Q  reflects  the  financial
statements  of  Sound  Federal  Bancorp,   the  federal   mid-tier   corporation
predecessor to Sound Federal Bancorp, Inc. References to the Company, unless the
context indicates otherwise, refer to Sound Federal Bancorp and its consolidated
subsidiary, the Bank.

     The consolidated financial statements included herein have been prepared by
the  Company  without  audit.  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 periods  presented.  Certain  information  and
footnote disclosures normally included in accordance with accounting  principles
generally  accepted  in the United  States of  America  have been  condensed  or
omitted  pursuant to the rules and  regulations  of the  Securities and Exchange
Commission;  however,  the Company believes that the disclosures are adequate to
make the  information  presented not misleading.  The operating  results for the
periods  presented are not necessarily  indicative of results to be expected for
any other interim period or for the entire fiscal year ending March 31, 2003.
                                       5

<page>

     The consolidated financial statements have been prepared in conformity with
accounting  principles  generally  accepted in the United States of America.  In
preparing the consolidated financial statements,  management is required to make
estimates  and  assumptions   that  affect  the  reported   amounts  of  assets,
liabilities,  income and expense. Actual results could differ significantly from
these  estimates.  A  material  estimate  that is  particularly  susceptible  to
near-term change is the allowance for loan losses, which is discussed in Note 4.

     The unaudited interim  consolidated  financial  statements presented herein
should be read in  conjunction  with the annual audited  consolidated  financial
statements of the Company for the fiscal year ended March 31, 2002,  included in
the Company's 2002 Annual Report on Form 10-K.

3.       Earnings Per Share

     Weighted  average  common  shares  used in  calculating  basic and  diluted
earnings per share for the three months ended  December 31, 2002 were  4,667,902
and  4,787,104,  respectively.  For the nine months  ended  December  31,  2002,
weighted  average shares for  calculating  basic and diluted  earnings per share
were 4,667,357 and 4,777,363, respectively.

     For the three months  ended  December 31,  2001,  weighted  average  common
shares used in calculating  basic and diluted  earnings per share were 4,622,016
and  4,677,645,  respectively.  For the nine months  ended  December  31,  2001,
weighted  average shares for  calculating  basic and diluted  earnings per share
were 4,631,398 and 4,679,120, respectively.

     Diluted  earnings per share reflects  incremental  shares for stock options
and unvested RRP shares, computed using the treasury stock method.

4.       Allowance for Loan Losses

     The allowance  for loan losses is increased by  provisions  for loan losses
charged to income and by  recoveries of prior  charge-offs,  and is decreased by
charge-offs. Losses are charged to the allowance when all or a portion of a loan
is deemed to be  uncollectible.  Recoveries of loans previously  charged-off are
credited to the allowance for loan losses when realized.  Management's  periodic
determination of the allowance is based on continuing  reviews of the portfolio,
using a consistently-applied methodology. The allowance for loan losses consists
of losses that are both  probable  and  estimable  at the date of the  financial
statements.  In determining the allowance for loan losses,  management considers
factors  such as the  Company's  past loan loss  experience,  known risks in the
portfolio,  adverse  situations  affecting a  borrower's  ability to repay,  the
estimated value of underlying collateral, and current economic conditions.

     Determining the allowance for loan losses involves  significant  management
judgments utilizing the best information available.  Those judgments are subject
to further  review by  various  sources,  including  the  Company's  regulators.
Changes in the  allowance  may be  necessary  in the future  based on changes in
economic and real estate market conditions,  new information  obtained regarding
known problem loans, the  identification  of additional  problem loans and other
factors, certain of which are outside of management's control.

     Activity in the  allowance  for loan losses for the  periods  indicated  is
summarized as follows:

<TABLE>
<CAPTION>

                                             Three Months Ended              Nine Months Ended             Year Ended
                                                 December 31,                    December 31,               March 31,
                                       ------------------------------  ---------------------------         ---------
                                            2002            2001            2002           2001               2002
                                       -------------   -------------   -------------  ------------         ---------
                                                               (in thousands)
<S>                                    <C>             <C>             <C>            <C>                <C>
Balance at beginning of period....     $     2,346     $     2,097     $     2,221    $     2,047        $    2,047
Provision for loan losses.........              50              75             175            125               175
Mortgage loans charged off........              --             (13)             --            (13)              (15)
Recoveries........................              --              12              --             12                14
                                         ---------       ----------      ---------      ----------        ----------
Balance at end of period..........     $     2,396     $     2,171     $     2,396    $     2,171        $    2,221
                                         =========       =========       =========      =========         ==========

</TABLE>

                                       6
<page>


5.       Borrowings

     The Company  had the  following  outstanding  borrowings  under  securities
repurchase  agreements  with the Federal Home Loan Bank (the "FHLB") at December
31, 2002:


                                Coupon
                                ------                               Accrued
    Maturity Date                Rate           Borrowings      Interest Payable
    -------------                ----           ----------      ----------------
                                                     (dollars in thousands)
    January 2008 (1)             5.42%      $       9,973       $        94
    December 2008(2)             4.72               5,000                --
    March 2003                   2.54               7,000                15
    March 2004                   3.57               7,000                21
    March 2005                   4.22               6,000
                                               --------------
                                                                         21
                                 4.17%      $      34,973       $       151
                                                 ===========         =========

     (1)  Callable quarterly beginning January 2003
     (2)  Callable quarterly since November 2001

     The  securities  transferred  to  the  FHLB  subject  to  these  repurchase
agreements include U.S. Government and agency securities available for sale with
a carrying value of $13.7 million and mortgage-backed  securities  available for
sale with a  carrying  value of $23.4  million at  December  31,  2002.  Accrued
interest receivable on these securities totaled $316,000 at December 31, 2002.

6.       Comprehensive Income (Loss)

     Comprehensive  income  represents the sum of net income and items of "other
comprehensive  income  or loss"  that are  reported  directly  in  stockholders'
equity,  such as the change during the period in the  after-tax  net  unrealized
gain or loss on securities available for sale.

     The Company's other  comprehensive  income (loss) represents net unrealized
holding gains and losses arising  during the period on securities  available for
sale, net of related income taxes, as follows:

<TABLE>
<CAPTION>

                                                       Three Months Ended            Nine Months Ended
                                                           December 31,                December 31,
                                                 -----------------------------  -------------------------
                                                      2002            2001           2002            2001
                                                 -------------   -------------  -------------   ---------
                                                                        (in thousands)
<S>                                                 <C>        <C>           <C>               <C>
Net unrealized holding gain (loss) arising during
 the period on securities available for sale.........$   68     $   (1,153)    $     1,671     $     (642)
Related deferred income tax effect..................    (29)           438            (649)           337
                                                     -----------  -------------    ---------    ----------
Other comprehensive income (loss).................   $   39     $     (715)    $     1,022     $     (305)
                                                      =========    ==========      =========    ==========
</TABLE>


     The Company's  accumulated other comprehensive income, which is included in
stockholders' equity, is summarized as follows:

<TABLE>
<CAPTION>

                                                                           December 31,          March 31,
                                                                              2002                 2002
                                                                              ----                 ----
                                                                                    (In thousands)

<S>                                                                        <C>                  <C>
Net unrealized holding gain on securities available for sale......         $  3,633             $     1,962
Additional minimum pension liability..............................             (170)                   (170)
Related deferred income taxes......................                          (1,340)                   (691)
                                                                         -----------               --------
  Accumulated other comprehensive income......................             $  2,123             $     1,101
                                                                         ===========               ========
</TABLE>

                                       7

<page>

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

General

     The  presentation  contained  in this  Form  10-Q  reflects  the  financial
statements  of  Sound  Federal  Bancorp,   the  federal   mid-tier   corporation
predecessor to Sound Federal Bancorp, Inc. References to the Company, unless the
context indicates otherwise, refer to Sound Federal Bancorp and its consolidated
subsidiary, the Bank.

     The Company's  results of operations depend primarily upon its net interest
income,  which is the  difference  between  income  earned  on  interest-earning
assets, such as loans and securities, and the interest expense paid on deposits.
The Company's  operations  are affected to a much lesser degree by  non-interest
income,  such as banking  service  charges and fees. Net income is also affected
by, among other things,  provisions for loan losses and  non-interest  expenses.
The Company's  principal operating  expenses,  aside from interest expense,  are
compensation  and benefits,  occupancy and equipment,  data  processing  service
fees,  advertising  and  promotion  and  other  expenses  such as ATM  expenses,
professional  fees and insurance  premiums.  The Company's results of operations
also are affected significantly by general economic and competitive  conditions,
particularly  changes  in market  interest  rates,  government  legislation  and
policies affecting fiscal affairs, housing and financial institutions,  monetary
policies  of the Federal  Reserve  System,  and the  actions of bank  regulatory
authorities.

     When used in this report on Form 10-Q,  the words or phrases  "will  likely
result," "are  expected  to," "will  continue,"  "is  anticipated,"  "estimate,"
"project"  or similar  expressions  are  intended to  identify  "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995.  Such  statements are subject to certain risks and  uncertainties  that
could cause actual  results to differ  materially  from  historical  results and
those  presently  anticipated  or  projected.  Among  others,  these  risks  and
uncertainties  include  changes in economic  conditions in the Company's  market
area,  changes in  policies by  regulatory  agencies,  fluctuations  in interest
rates,  demand  for loans in the  Company's  market  area and  competition.  The
Company  wishes to  caution  readers  not to place  undue  reliance  on any such
forward-looking  statements,  which speak only as of the date made.  The Company
wishes  to advise  readers  that the  factors  listed  above  could  affect  the
Company's financial performance and could cause the Company's actual results for
future periods to differ  materially from its  forward-looking  statements.  The
Company  does not  undertake,  and  specifically  declines  any  obligation,  to
publicly  release  the  result  of  any  revisions  which  may  be  made  to any
forward-looking  statements to reflect events or circumstances after the date of
such  statements or to reflect the occurrence of  anticipated  or  unanticipated
events.

Recent Developments

     On June 13, 2002, the Mutual Holding Company adopted a plan to convert to a
capital stock corporation. The conversion was completed on January 6, 2003. Upon
conversion, shares of Sound Federal Bancorp common stock held by the public were
exchanged for shares of Sound Federal Bancorp, Inc., a Delaware holding company,
which became the parent  company of Sound Federal  Savings (the "Bank") (as part
of the transaction,  Sound Federal Savings and Loan Association changed its name
to Sound Federal Savings).  In addition,  shares of Sound Federal Bancorp,  Inc.
were  offered  for sale to the Bank's  depositors  and  certain  borrowers  in a
subscription  offering.  The shares sold in the subscription  offering represent
the ownership interest of the Mutual Holding Company.

     Sound Federal Bancorp, Inc. sold 7,780,737 shares of common stock at $10.00
per share in the  offering  completed  on  January 6, 2003.  In  addition,  each
outstanding  share of common stock of Sound Federal  Bancorp was converted  into
2.7667  shares of the new  corporation  resulting  in the  issuance of 5,444,263
shares.  A total of  13,225,000  shares are now  outstanding  as a result of the
offering and share  exchange.  Net cash proceeds  from the offering  amounted to
$70.1 million,  including $5.1 million  withdrawn from deposit  accounts to fill
subscriptions.

                                       8
<page>

Financial Condition

     Assets.  Assets  totaled $779.5 million at December 31, 2002 as compared to
$624.0 million at March 31, 2002. The $155.5 million increase in total assets is
primarily due to subscription proceeds received in the offering of $68.1 million
and a $72.5 million increase in deposits. Federal funds sold and other overnight
deposits  increased  $65.2  million to $85.1  million at  December  31,  2002 as
compared to $19.8  million at March 31,  2002.  The  increase  in Federal  funds
reflects the subscription proceeds received in December 2002. These proceeds are
expected to be  redeployed  into  higher  yielding  assets as market  conditions
allow. Securities increased $71.6 million or 47.6% to $221.8 million at December
31, 2002 as compared to $150.2  million at March 31, 2002.  Net loans  increased
$15.8  million or 3.8% to $434.2  million at  December  31,  2002 as compared to
$418.4 million at March 31, 2002.

     Liabilities.  Deposits  totaled  $592.4  million at December 31,  2002,  as
compared to $519.9 million at March 31, 2002.  Certificates of deposit increased
$51.0 million to $363.3 million from $312.3  million,  savings and club accounts
increased  $9.9 million to $128.5  million from $118.6  million and money market
and NOW accounts  increased  $11.6 million to $100.6 million from $89.0 million.
Borrowings  totaled  $35.0  million at December 31,  2002,  as compared to $34.9
million at March 31, 2002.  Borrowings at December 31, 2002 consisted of Federal
Home Loan Bank borrowings.

     Subscription  offering  proceeds  of $68.1  million at  December  31,  2002
represents proceeds received in the Company's mutual-to-stock  conversion.  Such
funds were held in a special  interest-bearing escrow account pending completion
of the conversion. This amount does not include amounts withdrawn from depositor
accounts to fill subscription  orders,  stock acquired by the Company's Employee
Stock  Ownership  Plan and offering  expenses.  The  conversion was completed in
January 2003 and, at that time,  net proceeds from the offering of $70.1 million
were recorded as additional stockholders' equity.

     Amounts that were due to brokers for securities  purchased amounted to $6.2
million at December 31, 2002 (none at March 31,  2002).  This amount  represents
securities  purchased  prior to December  31, 2002 with  transaction  settlement
dates in January 2003.

     Stockholders'  Equity. Total stockholders' equity increased $7.2 million or
11.7% to $68.2  million at December  31, 2002,  as compared to $61.0  million at
March 31, 2002. The increase in  stockholders'  equity  reflects $6.2 million in
net income and an increase of $1.0 million in  accumulated  other  comprehensive
income,  partially  offset by dividends paid of $492,000.  The December 31, 2002
balance does not include the net proceeds from the offering  which were added to
stockholders'  equity as of the close of the  second-step  conversion in January
2003.  The  Company's  equity to assets ratio was 8.75% at December 31, 2002, as
compared to 9.78% at March 31, 2002.

Comparison of Results of Operations for the Three Months Ended
 December 31, 2002 and 2001

     Net income.  Net income  amounted to $2.0  million or diluted  earnings per
share of $0.42 for the quarter  ended  December  31,  2002,  as compared to $1.5
million, or $0.31 per diluted share for the quarter ended December 31, 2001. The
increase in net income for the quarter  ended  December  31, 2002 as compared to
the same quarter in the prior year is primarily  attributable  to a $1.6 million
increase in net interest  income,  partially  offset by increases of $818,000 in
non-interest expense and $306,000 in income tax expense.

     Interest  Income.  Interest  income totaled $9.9 million during the quarter
ended  December 31, 2002, as compared to $9.4 million for the same period in the
prior year.  This  increase was due to an increase of $123.6  million in average
interest-earning  assets to $666.2 million during the quarter ended December 31,
2002,  as  compared to $542.6  million  for the same  quarter in the prior year,
offset  partially  by a 103  basis  point  decrease  in  the  average  yield  on
interest-earning assets to 5.88% from 6.91%. The increase in the average balance
of  interest-earning  assets  was due  primarily  to  increases  in loans and in

                                       9
<page>

federal  funds sold and other  overnight  deposits.  The decrease in the average
yield on  interest-earning  assets reflects the origination of fixed-rate  loans
and the  repricing  of  adjustable-rate  securities  during  recent  periods  of
declining  interest rates.  In addition,  federal funds sold and other overnight
deposits,  which earn less interest than  longer-term  interest-earning  assets,
represent a larger portion of  interest-earning  assets.  Federal funds sold and
other overnight deposits represented 8.6% of average interest-earning assets for
the quarter ended  December 31, 2002, as compared to 6.9% for the same period in
the prior year. This increase is a result of the subscription  proceeds received
in December 2002, as well as an increase in the prepayment of mortgage loans and
mortgage-backed securities as a result of the low interest rates.

     Loans.   Interest  income on loans  increased  $1.0 million to $7.5 million
for the quarter  ended  December 31,  2002,  as compared to $6.5 million for the
same quarter in 2001.  This  increase is due to an increase of $92.9  million in
the average  balance of loans to $438.2 million from $345.3  million,  partially
offset by a 71 basis point decrease in the yield earned to 6.81% from 7.52%.

     The growth of the loan  portfolio  was  principally  a result of  increased
originations  as  borrowers  sought to take  advantage  of the  lowest  mortgage
interest  rates in 40 years.  The low  market  interest  rates  created a robust
housing market and also  compelled  many  consumers to refinance  their existing
mortgage loans.  The Company  originated $59.4 million of loans during the three
months ended  December 31, 2002,  including  $19.0  million of  adjustable  rate
mortgage loans. These loans were originated at rates lower than the yields being
earned on the existing loan portfolio. As a result, the decline in average yield
earned on the loan portfolio has continued in fiscal 2003. The yield on the loan
portfolio may decrease  further until market  interest  rates begin to increase.
The Company has not historically sold mortgage loans it originates.

     Mortgage-Backed   Securities.   Interest  on   mortgage-backed   securities
decreased  $474,000 to $1.6 million for the quarter ended  December 31, 2002, as
compared to $2.1 million for the quarter ended December 31, 2001.  This decrease
was due  primarily  to a decrease of 190 basis  points in the  average  yield to
5.43% from 7.33%, partially offset by an increase of $5.4 million in the average
balance to $120.0 million from $114.6 million for the quarter ended December 31,
2001.

     Other  Securities.  Interest  on  other  securities  decreased  $47,000  to
$486,000 for the quarter  ended  December 31, 2002,  as compared to $533,000 for
the same quarter in 2001,  due to a 95 basis point decrease in the average yield
to 4.16% from 5.11%,  which was partially  offset by an increase of $5.0 million
in the average  balance to $46.4  million.  The  decrease  in the average  yield
reflects the  decrease in market  interest  rates  during  fiscal years 2002 and
2003.

     Federal  Funds Sold and Other  Overnight  Deposits.  For the quarter  ended
December 31, 2002,  interest on Federal funds sold and other overnight  deposits
decreased  $76,000 to  $158,000,  reflecting  a 140 basis point  decrease in the
average yield earned to 1.10%,  partially offset by an increase of $19.5 million
in the average balance to $57.0 million.  The increase in the average balance is
due  primarily  to the  subscription  proceeds  received in  December  and an
increase in the prepayment of mortgage loans and mortgage-backed securities. The
decrease in the average  yield  reflects the decrease in market  interest  rates
during fiscal 2003.

     Interest Expense.  Interest expense for the quarter ended December 31, 2002
totaled $3.5 million as compared to $4.7 million for the quarter ended  December
31, 2001. The decrease in interest  expense was due to a decrease in the average
cost of  liabilities  to 2.22%  from  3.66%,  resulting  from  declining  market
interest  rates during  fiscal  2003.  The average  balance of  interest-bearing
liabilities  increased  $111.6  million to $621.3  million for the quarter ended
December 31, 2002 from $509.7 million for the same quarter in the prior year.

     Interest  expense on  certificates  of deposit totaled $2.6 million for the
quarter ended December 31, 2002 as compared to $3.8 million for the same quarter
in 2001.  The  decrease was due  primarily to a 200 basis point  decrease in the
average  cost to 2.86% from  4.86%,  offset  partially  by an  increase of $46.0
million in the average balance of certificates of deposit to $355.1 million from
$309.1  million in the same quarter last year.  The decrease in the average cost
of  certificates  of deposit was the result of the  decrease  in interest  rates
during fiscal years 2002 and 2003.

                                       10
<page>

     Interest expense on savings  accounts  amounted to $296,000 for the quarter
ended  December 31, 2002, as compared to $352,000 for the quarter ended December
31,  2001.  The  decrease  was the result of a 38 basis  point  decrease  in the
average  cost of savings  accounts to 0.93% from 1.31%,  offset  partially by an
increase of $19.2 million in the average  balance of savings  accounts to $126.1
million.

     Interest expense on other deposits (NOW and money market accounts) amounted
to $165,000 for the quarter ended  December 31, 2002 as compared to $256,000 for
the same quarter in the prior year. The average cost of these accounts decreased
64 basis  points to 0.74% from 1.38%,  offset  partially by an increase of $14.9
million in the average balance of these accounts.

     For the quarter  ended  December 31, 2002,  interest  expense on borrowings
amounted to  $409,000  as  compared  to $241,000 in the prior year.  The average
balance of borrowings for the current  quarter was $35.0 million and the average
cost was 4.64%.  For the quarter ended December 31, 2001, the average balance of
borrowings  was $14.8  million and the average  cost was 6.44%.  The increase in
Federal Home Loan Bank borrowings was used to fund loan originations.

     Net Interest Income. Net interest income for the quarter ended December 31,
2002 amounted to $6.4 million,  an increase of $1.6 million, or 33.9%, from $4.8
million for the same  quarter in the prior year.  The  interest  rate spread was
3.66% and 3.25% for the quarters ended December 31, 2002 and 2001, respectively.
The net interest margin for those periods was 3.81% and 3.51%, respectively.

     The increases in interest rate spread and net interest  margin are a result
of the cost of our interest-bearing liabilities decreasing faster than the rates
on our  interest-earning  assets such as loans or  securities  during the recent
period of declining interest rates.  However,  if market interest rates decrease
further,  interest  rate  spread  and net  interest  margin may  decrease  since
competitive factors could inhibit our ability to lower interest rates on deposit
accounts any further.  The interest rate spread and net interest margin may also
come  under  pressure  as the full  effect of recent  mortgage  refinancings  is
reflected in asset yields. In addition, if interest rates increase,  the cost of
interest-bearing   liabilities   will   increase   faster   than  the  rates  on
interest-earning  assets, also causing decreases in net interest rate spread and
net interest margin.

     Provision for Loan Losses.  Management regularly reviews the loan portfolio
and makes  provisions  for loan  losses in  amounts  required  to  maintain  the
allowance  for loan losses in  accordance  with  generally  accepted  accounting
principles.  The  allowance  consists  of  losses  that  are both  probable  and
estimable at the date of the financial statements. The allowance for loan losses
consists of amounts  allocated to specific  nonperforming  loans and to loans in
each major portfolio category. Loan categories such as single-family residential
mortgage loans, which represented 90.6% of total loans at December 31, 2002, are
generally  evaluated on an aggregate or "pool"  basis.  The  allowance  for loan
losses is  predominately  determined on a pool basis by applying loss factors to
the current  balances  of the  various  loan  categories.  The loss  factors are
determined by management  based on an evaluation of historical loss  experience,
delinquency  trends,  volume  and type of lending  conducted,  and the impact of
current economic conditions in the Company's market area.

     The provision  for loan losses was $50,000 for the quarter  ended  December
31,  2002 as  compared  to $75,000 for the  quarter  ended  December  31,  2001.
Non-performing  loans amounted to $795,000,  or 0.18% of total loans at December
31, 2002, as compared to $771,000, or 0.21% of total loans at December 31, 2001.
The allowance for loan losses amounted to $2.4 million,  or 0.55% of total loans
at  December  31,  2002 and $2.2  million,  or 0.53% of total loans at March 31,
2002.  There were no  charge-offs  for the quarter  ended  December  31, 2002 as
compared to $13,000 for the same period in the prior year.  The  increase in the
allowance for loan losses  reflects our  continued  substantial  origination  of
adjustable-rate  mortgage loans in the portfolio and overall  portfolio  growth.
Adjustable  rate mortgage loans can involve  greater credit risk than fixed rate
loans  because as  interest  rates  increase,  the  underlying  payments  by the
borrower increase,  thus increasing the risk of default by the borrower.  At the
same time,  the  marketability  of the  underlying  collateral  may be adversely
affected by higher interest  rates. At December 31, 2002,  adjustable rate loans
accounted  for 18.2% of total  loans as  compared to 15.0% at March 31, 2002 and
9.4% at December 31, 2001.

                                       11
<page>

     Non-Interest  Income.  Non-interest income consists  principally of service
charges on deposit  accounts,  fees earned on the sale of  investment  products,
late  charges on loans and  various  other  service  fees.  Non-interest  income
totaled $229,000 and $194,000 for the quarters ended December 31, 2002 and 2001,
respectively,  and  included  service fees of $229,000 and $167,000 for the same
respective quarters.  Service fees include fees of $32,000 and $53,000 generated
by Mamaroneck  Advisors,  Inc.  during the quarters  ended December 31, 2002 and
2001,  respectively.  Mamaroneck  Advisors,  Inc.  is a  subsidiary  that  sells
investment and insurance products.

     Non-Interest  Expense.  Non-interest  expense  totaled $3.3 million for the
quarter  ended  December 31,  2002,  as compared to $2.5 million for the quarter
ended  December  31,  2001.  This  increase  was due  primarily  to increases of
$445,000 in compensation expense,  $219,000 in advertising and promotion expense
and  $113,000 in other  non-interest  expense.  The  increases  in  non-interest
expense  include  operating  expenses for the New Rochelle and Somers  branches,
which  were  opened in  December  2001 and July 2002,  respectively,  as well as
expenses related to internal growth to support lending and branch operations.

     Income Taxes.  Income tax expense amounted to $1.2 million and $914,000 for
the quarters ended December 31, 2002 and 2001,  respectively.  The effective tax
rates for those same periods were 37.6% and 38.4%, respectively.


Comparison of Results of Operations for the Nine Months Ended
 December 31, 2002 and 2001

     Net  Income.  For the nine  months  ended  December  31,  2002,  net income
amounted to $6.2  million or diluted  earnings per share of $1.30 as compared to
$4.0 million,  or $0.86 per diluted share for the same period in the prior year.
The  increase  in net income for the nine  months  ended  December  31,  2002 is
primarily  due to a $5.7  million  increase in net  interest  income,  partially
offset by increases of $2.1 million in non-interest  expense and $1.3 million in
income tax expense.

     Interest Income.  Interest income totaled $29.5 million for the nine months
ended December 31, 2002, as compared to $28.3 million for the same period in the
prior  year.  The  increase in  interest  income  reflects an increase of $103.9
million in average  interest-earning  assets to $633.3  million as  compared  to
$529.4 million for the same period in the prior year,  partially  offset by a 91
basis point  decrease in the average yield on  interest-earning  assets to 6.18%
from 7.09%. The increase in the average balance of  interest-earning  assets was
due  primarily  to  increases  in loans  and in  federal  funds  sold and  other
overnight   deposits,   partially  offset  by  a  decrease  in   mortgage-backed
securities.  The  decrease  in the  average  yield  on  interest-earning  assets
reflects   the   origination   of   fixed-rate   loans  and  the   repricing  of
adjustable-rate securities during recent periods of declining interest rates. In
addition,  federal  funds  sold and other  overnight  deposits,  which earn less
interest than longer-term interest-earning assets, represent a larger portion of
interest-earning  assets.  Federal  funds  sold  and  other  overnight  deposits
represented 6.5% of  interest-earning  assets for the nine months ended December
31,  2002,  as  compared  to 5.7% for the same  period in the prior  year.  This
increase is a result of the subscription  proceeds received in December 2002, as
well as an increase in the  prepayment  of  mortgage  loans and  mortgage-backed
securities as a result of the low interest rates.

     Loans.   For  the nine months ended December 31, 2002,  interest  income on
loans amounted to $22.8 million as compared to $18.6 million for the same period
in the prior year. This increase was due to an increase of $106.3 million in the
average balance of loans,  partially  offset by a 57 basis point decrease in the
yield earned to 6.95% from 7.52%.

                                       12
<page>

     The growth of the loan  portfolio  was  principally  a result of  increased
originations,  discussed above. We originated $149.7 million of loans during the
nine months ended December 31, 2002.  These loans were originated at rates lower
than the yields being earned on the existing loan  portfolio.  As a result,  the
decline in average  yield  earned on the loan  portfolio  continued in the first
nine months of fiscal 2003. The yield on the loan portfolio may decrease further
until market interest rates begin to increase.

     Mortgage-Backed Securities.  Interest on mortgage-backed securities for the
nine months ended  December 31, 2002  decreased  $2.2 million to $4.7 million as
compared to $6.9 million for the same period in the prior year. The decrease was
due to a decrease of $18.1 million in the average  balance to $107.5 million and
a decrease  of 151 basis  points in the average  yield to 5.76% from 7.27%.  The
lower  average  balances in the current year reflect  principal  repayments  and
prepayments on mortgage-backed securities, which were used to fund loan growth.

     Other Securities.  For the nine months ended December 31, 2002, interest on
other securities  decreased $356,000 to $1.5 million as compared to $1.9 million
for the same period in the prior year. The decrease was due to a decrease in the
average  yield of 154 basis points to 4.49% from 6.03%,  partially  offset by an
increase of $3.6  million in the average  balance to $44.6  million for the nine
months ended December 31, 2002.

     Federal Funds Sold and Other Overnight Deposits.  For the nine months ended
December 31, 2002,  interest on federal funds sold and other overnight  deposits
decreased  $338,000 to $390,000,  reflecting  a 193 basis point  decrease in the
average yield to 1.25%,  partially offset by an increase of $10.9 million in the
average balance to $41.3 million. The decrease in the average yield reflects the
decrease in market interest rates during fiscal 2003.

     Interest  Expense.  For the nine months ended  December 31, 2002,  interest
expense on interest-bearing liabilities decreased $4.5 million to $10.5 million,
as compared to $15.0  million for the nine months ended  December 31, 2001.  The
decrease  in  interest  expense  was due to a 160 basis  point  decrease  in the
average  cost to 2.37% from  3.97%,  partially  offset by an  increase  of $90.2
million  in the  average  balance  of  interest-bearing  liabilities  to  $589.6
million.

     For  the  nine  months  ended  December  31,  2002,   interest  expense  on
certificates  of deposit  amounted to $7.7 million as compared to $12.0  million
for the same period in the prior year. The decrease was due to a 226 basis point
decrease  in the  average  cost to 3.04%,  partially  offset by a $35.4  million
increase in the average  balance of certificates of deposit to $336.0 million as
compared to $300.6 million for the same period in the prior year.

     For the nine months ended  December 31, 2002,  interest  expense on savings
accounts  decreased  $383,000  to $936,000 as compared to the same period in the
prior year.  The average cost of savings  accounts  decreased 62 basis points to
1.01%,  partially  offset by an increase of $15.7 million in the average balance
of savings accounts to $123.3 million for the same periods.

     For the nine months  ended  December 31,  2002,  interest  expense on other
deposits amounted to $568,000 as compared to $805,000 for the same period in the
prior year.  The  average  cost of these  accounts  decreased  62 basis  points,
partially offset by an increase of $15.0 million in the average balance of these
accounts.

     For the nine months ended December 31, 2002, interest expense on borrowings
was $1.2  million as compared to $767,000 for the same period in the prior year.
The increase in interest  expense was due to an increase of $20.2 million in the
average balance of borrowings to $35.0 million,  partially  offset by a decrease
of 219 basis points in the average cost of borrowings to 4.69%.  The increase in
borrowings was used to fund loan originations.

     Net  Interest  Income.  For the nine months ended  December  31, 2002,  net
interest  income  amounted to $19.0 million as compared to $13.3 million for the
same period in the prior year.  The interest rate spread was 3.81% and 3.12% and
the net  interest  margin was 3.97% and 3.34% for the  respective  periods.  The
increases in interest rate spread and net interest margin were the result of the
cost of our interest-bearing liabilities decreasing faster than the rates on our
interest-earning assets such as loans or securities during a period of declining
interest rates.

                                       13
<page>

     Provision  for Loan Losses.  The provision for loan losses was $175,000 for
the nine months  ended  December  31, 2002 as compared to $125,000  for the same
period in the prior year.  Non-performing loans amounted to $795,000 or 0.18% of
total  loans at  December  31,  2002,  as compared to $771,000 or 0.21% of total
loans at December  31,  2001.  The  allowance  for loan losses  amounted to $2.4
million or 0.55% of total loans at December  31, 2002 and $2.2  million or 0.53%
of total  loans at March 31,  2002.  There were no  charge-offs  during the nine
months ended December 31, 2002 as compared to $13,000 for the same period in the
prior year. The increase in the provision and allowance for loan losses reflects
our continued  substantial  origination  of  adjustable-rate  mortgage loans and
overall  portfolio  growth.  Adjustable-rate  mortgage loans can involve greater
credit risk than  fixed-rate  loans  because as  interest  rates  increase,  the
underlying  payments  by the  borrower  increase,  thus  increasing  the risk of
default by the borrower.  At the same time, the  marketability of the underlying
collateral may be adversely  affected by higher  interest rates. At December 31,
2002,  adjustable  rate loans  accounted for 18.2% of total loans as compared to
15.0% at March 31, 2002 and 9.4% at December 31, 2001.

     Non-Interest Income. Non-interest income for the nine months ended December
31, 2002  totaled  $623,000 as  compared to $559,000  for the nine months  ended
December  31, 2001,  and included  service fees of $610,000 and $475,000 for the
respective  periods.  The increase in service fees was due  primarily to fees of
$139,000 and $101,000  from the sale of investment  products for the  respective
nine-month  periods.  Non-interest income for the nine months ended December 31,
2002  included a gain on the sale of real estate owned of $13,000 as compared to
$84,000 for the same period in 2001.

     Non-Interest  Expense.  For  the  nine  months  ended  December  31,  2002,
non-interest  expense increased $2.1 million to $9.4 million as compared to $7.3
million for the same period in the prior year.  This  increase was due primarily
to increases of $1.0 million in compensation and benefits, $190,000 in occupancy
and  equipment  expense,  $336,000  in  advertising  and  promotion  expense and
$502,000 in other non-interest  expense.  The increases in non-interest  expense
include operating expenses for the New Rochelle and Somers branches,  which were
opened in December 2001 and July 2002, respectively, as well as expenses related
to internal  growth to support  lending  and branch  operations.  Occupancy  and
equipment  for the nine months  ended  December  31, 2001  includes  $170,000 of
pre-tax refunds of real estate taxes related to branch locations.

     Income Taxes. For the nine months ended December 31, 2002 and 2001,  income
tax  expense  amounted  to $3.8  million  and $2.5  million,  respectively.  The
effective tax rates for those same periods were 37.9% and 38.0%, respectively.

Liquidity and Capital Resources

     The  Company's  primary  sources of funds are  deposits,  the proceeds from
principal and interest payments on loans and mortgage-backed securities, and the
proceeds  from  maturities  of  investments.   While  maturities  and  scheduled
amortization of loans and securities are a predictable source of funds,  deposit
flows and mortgage prepayments are greatly influenced by general interest rates,
economic conditions and competition.

     The Company's primary investing  activities are the origination of mortgage
loans, and the purchase of short-term  investments,  government agency bonds and
adjustable  rate  mortgage-backed   securities.   These  activities  are  funded
primarily by deposit growth and principal  repayments on loans,  mortgage-backed
securities and other investment  securities.  For the nine months ended December
31, 2002, the Company  originated  loans  totaling  $149.7 million and purchased
$127.0 million of securities.  These  disbursements were funded in part by $63.2
million  in  principal  payments,  maturities  and calls of  securities,  $132.1
million in loan principal  repayments,  an increase of $72.5 million in deposits
and subscriptions of $68.1 million received from the stock  conversion.  For the
year ended March 31, 2002,  the Company  originated  $220.4 million of loans and
purchased $57.7 million of securities.

                                       14
<page>

     Liquidity  management for the Company is both a daily and long-term process
which is part of the Company's  overall  management  strategy.  Excess funds are
generally  invested  in  short-term   investments  such  as  Federal  funds  and
certificates  of deposit.  In the event that the Bank should require  additional
sources of funds,  it could  borrow from the Federal  Home Loan Bank of New York
under an available line of credit.

     At December 31, 2002, the Company had outstanding loan commitments of $62.9
million. The Company anticipates that it will have sufficient funds available to
meet its current loan commitments. Time deposits scheduled to mature in one year
or less from December 31, 2002, totaled $285.7 million. Management believes that
a significant portion of such deposits will remain with the Company.

     The Bank is subject to certain  minimum  leverage,  tangible and risk-based
capital  requirements  established by regulations of the OTS. These  regulations
require savings associations to meet three minimum capital standards: a tangible
capital  ratio  requirement  of 1.5% of total  assets as adjusted  under the OTS
regulations;  a  leverage  ratio  requirement  of 4.0% of core  capital  to such
adjusted  total assets;  and a risk-based  capital ratio  requirement of 8.0% of
core and  supplementary  capital  to total  risk-based  assets.  The OTS  prompt
corrective  action  regulations  impose  a 4.0%  core  capital  requirement  for
categorization  as an  "adequately  capitalized"  thrift and a 5.0% core capital
requirement for categorization as a "well capitalized" thrift. Goodwill and most
other  intangible  assets are  deducted in  determining  regulatory  capital for
purposes of all  capital  ratios.  In  determining  the amount of  risk-weighted
assets for purposes of the risk-based capital requirement, a savings association
must  compute  its  risk-based  assets by  multiplying  its assets  and  certain
off-balance  sheet  items  by  risk-weights,  which  range  from 0% for cash and
obligations  issued by the United States  Government or its agencies to 100% for
consumer and commercial  loans, as assigned by the OTS capital  regulations.  At
December 31, 2002, the Bank exceeded all of the OTS minimum  regulatory  capital
requirements,   and  was  classified  as  a  well-capitalized   institution  for
regulatory purposes.

     The  following  table sets  forth the  capital  position  of the Bank as of
December 31, 2002 and March 31, 2002. The actual capital  amounts and ratios set
forth below are for the Bank only and,  accordingly,  do not include  additional
capital retained by Sound Federal Bancorp.

<TABLE>
<CAPTION>

                          OTS Requirements_____________
                                                                    Minimum Capital         Classification as
                                             Bank Actual               Adequacy              Well Capitalized
                                         Amount       Ratio        Amount       Ratio        Amount     Ratio
                                                                 (Dollars in thousands)
December 31, 2002
<S>                                   <C>             <C>        <C>              <C>      <C>          <C>
Tangible capital....................  $   46,395      6.1%       $  11,338        1.5%
Tier I (core) capital...............      46,395       6.1          30,235        4.0     $   37,793     5.0%
Risk-based capital:
   Tier I...........................      46,395      13.3                                    20,959     6.0
   Total............................      48,791      14.0          27,945        8.0         34,931     10.0

March 31, 2002
Tangible capital....................  $   39,865        6.5%     $   9,139        1.5%
Tier I (core) capital...............      39,865        6.5         24,371        4.0     $   30,464     5.0%
Risk-based capital:
   Tier I...........................      39,865       12.7                                   18,776     6.0
   Total............................      42,087       13.5         25,035        8.0         31,294     10.0

</TABLE>

Impact of Recent Accounting Pronouncements

     Statement of Financial  Accounting  Standards (`SFAS") No. 148, "Accounting
for  Stock-Based  Compensation  -  Transition  and  Disclosure,"  was  issued in
December 2002 and amends SFAS No. 123, "Accounting for Stock-Based Compensation"
to provide  alternative  methods of  transition  for an entity that  voluntarily
changes to the  fair-value-based  method of accounting for stock-based  employee
compensation.  SFAS No. 148 also amends the disclosure  requirements of SFAS No.
123 for fiscal years ending after December 31, 2002.  Management does not expect
that the  provisions  of SFAS No.  148 will  impact  the  Company's  results  of
operations  or financial  condition,  although  additional  disclosures  will be
provided in the March 31, 2003 consolidated financial statements.

                                       15
<page>

     FASB Interpretation ("FIN") No. 45, "Guarantor's  Accounting and Disclosure
Requirements for Guarantees,  Including  Indirect  Guarantees of Indebtedness of
Others," was issued in November  2002.  This  interpretation  elaborates  on the
disclosures  to be made by a  guarantor  in its  interim  and  annual  financial
statements  about its obligations  under certain  guarantees that it has issued.
The disclosure  requirements in this  interpretation are effective for financial
statements  of interim or annual  periods  ending after  December 15, 2002.  The
interpretation  also  requires  a  guarantor  to  recognize,  at fair  value,  a
liability  for the  obligation  at inception  of the  guarantee  (effective  for
guarantees  issued or modified  after  December 31, 2002).  Management  does not
expect that the  provisions of FIN No. 45 will impact the  Company's  results of
operations or financial condition.

     FIN No. 46,  "Consolidation of Variable  Interest  Entities," was issued in
January 2003 and is an  interpretation  of Accounting  Research Bulletin No. 51.
This  interpretation  specifies how a business  enterprise  should  evaluate its
interests in a variable interest entity to determine whether to consolidate that
entity.  A  variable  interest  entity  must  be  consolidated  by  its  primary
beneficiary  if the entity does not  effectively  disperse  the risks  involved.
Management  does not expect  that the  provisions  of FIN No. 46 will impact the
Company's results of operations or financial condition.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

     The Company's most  significant  form of market risk is interest rate risk,
as the majority of the Company's assets and liabilities are sensitive to changes
in interest rates. The Company's assets consist primarily of fixed rate mortgage
loans, which have longer maturities than the Company's liabilities which consist
primarily  of  deposits.  The  Company's  mortgage  loan  portfolio,  consisting
primarily of loans secured by residential  real property  located in Westchester
County,  New York and Fairfield  County,  Connecticut,  is also subject to risks
associated with the local economy.  The Company does not own any trading assets.
At December  31,  2002,  the Company  did not have any hedging  transactions  in
place,  such as interest rate swaps and caps.  The Company's  interest rate risk
management  program focuses primarily on evaluating and managing the composition
of the Company's  assets and liabilities in the context of various interest rate
scenarios.  Factors beyond management's  control,  such as market interest rates
and competition, also have an impact on interest income and interest expense.

     During the quarter  ended  December  31,  2002,  there were no  significant
changes in the Company's assessment of market risk.

Item 4.  Controls and Procedures

     The Company's  management,  including the Chief Executive Officer and Chief
Financial  Officer,  evaluated the  effectiveness of the design and operation of
the Company's  disclosure  controls and procedures (as defined in Rule 13a-14(c)
under the Securities  Exchange Act of 1934, as amended) (the "Exchange  Act") as
of a date (the  "Evaluation  Date")  within 90 days prior to the filing  date of
this report. Based upon that evaluation, the Company's management, including the
Chief Executive Officer and Chief Financial  Officer,  concluded that, as of the
Evaluation Date, the Company's disclosure controls and procedures were effective
in timely alerting them to any material  information relating to the Company and
its subsidiaries required to be included in the Company's Exchange Act filings.

     There were no significant  changes made in the Company's  internal controls
or in other  factors that could  significantly  affect these  internal  controls
subsequent  to the  date of the  evaluation  performed  by the  Company's  Chief
Executive Officer and Chief Financial Officer.

                                       16
<PAGE>


Part II OTHER INFORMATION

Item 1.  Legal Proceedings

     The Company is not  involved in any pending  legal  proceedings  other than
routine legal  proceedings  occurring in the ordinary  course of business.  Such
routine  legal  proceedings  in the  aggregate  are believed by management to be
immaterial to the Company's financial condition and results of operations.

Item 2.  Changes in Securities and Use of Proceeds

         None

Item 3.  Defaults upon Senior Securities

         None

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

     On  December  30,  2002,  the  Company's  stockholders  voted  on a Plan of
Conversion of the Mutual Holding  Company from mutual to stock form. The vote on
the proposal was as follows: 4,012,397 for; 39,740 against; 3,174 abstain.

Item 5.  Other Information

         None

Item 6.  Exhibits and Reports on Form 8-K

     (a)  Exhibit  99.1 -  Certification  of Chief  Executive  Officer and Chief
          Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
          2002.

     (b)  Reports on Form 8-K

          None




                                       17
<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.






                                           Sound Federal Bancorp, Inc.
                                           (Registrant)





                                    By:      /s/ Anthony J. Fabiano
                                             ---------------------------
                                            Anthony J. Fabiano
                                            Duly Authorized and Chief Financial
                                            and Accounting Officer


February 13, 2003

<PAGE>


                    Certification of Chief Executive Officer
            Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002


I, Richard P. McStravick, President and Chief Executive Officer, certify that:

     (1)  I have  reviewed this  quarterly  report on Form 10-Q of Sound Federal
          Bancorp;

     (2)  Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;

     (3)  Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;

     (4)  The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

     (5)  The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

     (6)  The  registrant's  other  certifying  officers and I have indicated in
          this  quarterly  report  whether  there  were  significant  changes in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.

February 13, 2003                          /s/ Richard P. McStravick
---------------------                      -----------------------------------
Date                                       President and Chief Executive Officer

<page>



                    Certification of Chief Financial Officer
            Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002


     I, Anthony J. Fabiano,  Senior Vice President and Chief Financial  Officer,
certify that:

     (1)  I have  reviewed this  quarterly  report on Form 10-Q of Sound Federal
          Bancorp;

     (2)  Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;

     (3)  Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;

     (4)  The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and have:  a) designed  such  disclosure  controls and  procedures  to
          ensure that material information relating to the registrant, including
          its  consolidated  subsidiaries,  is made known to us by others within
          those  entities,  particularly  during the period in which this annual
          report  is being  prepared;  b)  evaluated  the  effectiveness  of the
          registrant's disclosure controls and procedures as of a date within 90
          days  prior  to  the  filing  date  of  this  quarterly   report  (the
          "Evaluation  Date");  and c)  presented in this  quarterly  report our
          conclusions  about the  effectiveness  of the disclosure  controls and
          procedures  based on our evaluation as of the Evaluation Date; (5) The
          registrant's other certifying officers and I have disclosed,  based on
          our most recent evaluation, to the registrant's auditors and the audit
          committee of  registrant's  board of directors (or persons  performing
          the equivalent functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

     b)   any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and

     (6)  The  registrant's  other  certifying  officers and I have indicated in
          this  quarterly  report  whether  there  were  significant  changes in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.

February 13, 2003                             /s/ Anthony J. Fabiano
---------------------                         ----------------------------------
Date                                          Senior Vice President
                                              and Chief Financial Officer


<page>

Exhibit 99.1

                            Certification pursuant to
                             18 U.S.C. Section 1350,
                             as adopted pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002



     Richard P. McStravick,  President and Chief Executive Officer,  and Anthony
J. Fabiano,  Senior Vice President and Chief Financial  Officer of Sound Federal
Bancorp  (the  "Company"),  each  certify in his  capacity  as an officer of the
Company that he has reviewed  the  Quarterly  Report of the Company on Form 10-Q
for the quarter ended December 31, 2002 and that to the best of his knowledge:

     (1)  the report fully complies with the  requirements of Sections 13(a) and
          15(d) of the Securities Exchange Act of 1934; and

     (2)  the  information  contained  in the  report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.

     The purpose of this  statement  is solely to comply with Title 18,  Chapter
63,  Section 1350 of the United  States  Code,  as amended by Section 906 of the
Sarbanes-Oxley Act of 2002.




February 13, 2003                          /s/ Richard P. McStravick
---------------------                      -----------------------------------
Date                                       President and Chief Executive Officer

February 13, 2003                          /s/ Anthony J. Fabiano
---------------------                      -----------------------------------
Date                                       Senior Vice President and
                                            Chief Financial Officer