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 June 30, 1999

                                       OR

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

           For the transition period from ____________ to ____________

                        Commission file number 000-24811

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

          Federal                                               13-4029393
(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  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                                              August 9 , 1999
       _____________                                        ________________
       Common Stock,                                           5,212,218
     par value, $0.10


<PAGE>




                                TABLE OF CONTENTS


                         PART I -- FINANCIAL INFORMATION
<TABLE>
<CAPTION>

Item 1.  Financial Statements (Unaudited)

<S>                                                                                                              <C>
         Consolidated Balance Sheets at June 30, 1999 and March 31, 1999......................................    1

         Consolidated Statements of Income for the Quarters
         ended June 30, 1999 and 1998.............................................................................2

         Consolidated Statement of Changes in Stockholders' Equity  for the Quarter
         ended June 30, 1999......................................................................................3

         Consolidated Statements of Cash Flows for the Quarters
         ended June 30, 1999 and 1998.............................................................................4

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

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations................................................................................... 7

Item 3.  Quantitative and Qualitative Disclosures about Market Risk..............................................13


                                            PART II -- OTHER INFORMATION

Item 1.  Legal Proceedings.......................................................................................14

Item 2.  Changes in Securities and Use of Proceeds...............................................................14

Item 3.  Defaults upon Senior Securities.........................................................................14

Item 4.  Submission of Matters to a Vote of Security Holders.....................................................14

Item 5.  Other Information.......................................................................................14

Item 6.  Exhibits and Reports on Form 8-K........................................................................14

         Signatures..............................................................................................15
</TABLE>

                                       i
<PAGE>




Part 1. - Financial Information

Item 1.  Financial Statements

Sound Federal Bancorp and Subsidiary
<TABLE>
<CAPTION>

CONSOLIDATED BALANCE SHEETS
(Unaudited)
( Dollars in thousands, except per share data)                                      June 30,                March 31,
                                                                                      1999                    1999
                                                                              --------------------       ------------
<S>                                                                                     <C>                  <C>
Assets
 Cash and due from banks..............................................        $           6,094              $    5,082
 Federal funds sold..........................................                            28,000                  44,400
 Certificates of deposit..............................................                   11,776                  10,686
 Securities:
    Available-for-sale, at fair value.................................                   49,776                  39,402
     Held-to-maturity, at amortized cost (fair value of
       $41,483                 and $45,087 at June 30 and March 31, 1999,                41,908                  45,590
                                                                                   ------------            ------------
       respectively).............................................
          Total securities............................................                   91,684                  84,992
                                                                                   ------------            ------------

 Loans, net:
     Mortgage loans...................................................                  153,289                 143,626
     Consumer loans...................................................                      940                   1,004
     Allowance for loan losses (Note 4)...............................                   (1,119)                 (1,094)
                                                                                   -------------           -------------
          Total loans, net............................................                  153,110                 143,536
                                                                                   ------------            ------------

 Accrued interest receivable..........................................                    1,691                   1,436
 Federal Home Loan Bank stock.........................................                    1,884                   1,884
 Premises and equipment, net..........................................                    2,290                   1,935
 Other assets.........................................................                   1,580                   1,360
                                                                                   -----------             -----------
           Total assets...............................................        $         298,109       $         295,311
                                                                                   ============            ============

Liabilities and Stockholders' Equity
  Liabilities:
      Deposits........................................................        $         240,931       $         237,279
      Mortgagors' escrow funds.......................................                     1,699                   2,480
      Accrued expenses and other liabilities..........................                     669                     568
                                                                                   ------------            -----------
         Total liabilities............................................                 243,299                 240,327
                                                                                   ------------            -----------
  Stockholders' equity:
     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; 5,212,218 shares issued and outstanding at
        June 30 and March 31, 1999)...................................                     521                     521
     Additional paid-in capital.......................................                  22,430                  22,430
     Common stock held by ESOP .......................................                   (1,633)                 (1,681)
     Retained earnings................................................                  34,142                  33,846
     Accumulated other comprehensive loss, net of taxes...............                     (650)                   (132)
                                                                                   --------------          -------------
          Total stockholders' equity..................................                  54,810                  54,984
                                                                                   ------------            -----------
          Total liabilities and stockholders' equity..................        $        298,109        $        295,311
                                                                                   ============            ===========
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.
                                       1
<PAGE>


Sound Federal Bancorp and Subsidiary
<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
                                                                                         For the Quarter Ended
                                                                                                      June 30,
                                                                                          1999           1998
                                                                                           ----        -------
<S>                                                                                        <C>             <C>
   Interest and Dividend Income
    Loans....................................................................     $      2,871    $      2,736
    Securities.............................................................              1,341           1,098
    Federal funds sold and certificates of deposit.........................                565             672

    Other earning assets...................................................                 45              38
                                                                                     ---------       ---------
    Total interest and dividend income.....................................              4,822           4,544
                                                                                     ---------       ---------


   Interest Expense
    Deposits...............................................................              2,226           2,246
     Other interest-bearing liabilities....................................                 11              10
                                                                                     ---------       ---------
    Total interest expense.................................................              2,237           2,256
                                                                                     ----------      ---------

    Net interest income....................................................              2,585           2,288
    Provision for loan losses (Note 4).....................................                 25              81
                                                                                     ---------       ---------
    Net interest income after provision for loan losses....................              2,560           2,207
                                                                                     ---------       ---------

   Non-Interest Income
     Service charges and fees..............................................                 49              50
     Gain on sale of real estate owned.....................................                 81              --
                                                                                     ---------       ---------
     Total non-interest income.............................................                130              50
                                                                                     ---------       ---------

   Non-Interest Expense
     Compensation and benefits.............................................                735             542
     Occupancy and equipment...............................................                193              57
     Federal deposit insurance costs.......................................                 41              34
     Data processing service fees..........................................                 95              57
     Advertising and promotion.............................................                 76              37
     Other.................................................................                465             267
                                                                                     ---------       ---------
     Total non-interest expense............................................              1,605             994
                                                                                     ---------       ---------

    Income  before income tax expense......................................              1,085           1,263
    Income tax expense.....................................................                424             517
                                                                                     ---------       ---------
    Net income.............................................................       $        661    $        746
                                                                                     =========       =========

    Basic earnings per common share (Note 3)...............................       $       0.13
                                                                                     =========

</TABLE>



See accompanying notes to the unaudited consolidated financial statements.

                                       2
<PAGE>




<TABLE>
<CAPTION>
Sound Federal Bancorp and Subsidiary

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Quarter Ended June 30, 1999
(Unaudited)
(Dollars in thousands)



                                                                      Common                    Accumulated
                                                       Additional      Stock                       Other               Total
                                            Common      Paid-In       Held By      Retained    Comprehensive     Stockholders'
                                            Stock       Capital        ESOP        Earnings         Loss              Equity
                                          ---------    ----------    --------      --------    -------------     ------------

<S>                                        <C>          <C>        <C>           <C>          <C>              <C>
Balance at March 31, 1999............      $  521       $ 22,430   $   (1,681)   $    33,846  $       (132)    $      54,984
Net income...........................          --            --           --             661            --               661
 Change in net unrealized loss on
    securities available for sale, net
    of tax effect....................          --            --            --            --            (518)           (518)
                                                                                                                  ----------
     Total comprehensive income......                                                                                    143
Dividends declared...................          --            --           --            (365)           --             (365)
ESOP shares committed to be released
   for allocation (4,803 shares).....          --            --            48            --            --                48
                                           -------    -----------     -------       --------     ----------       ---------
Balance at June 30, 1999.............    $    521     $   22,430   $   (1,633)   $    34,142  $       (650)    $      54,810
                                          =======       ========      ========      ========     ==========       ==========
</TABLE>







See accompanying notes to the unaudited consolidated financial statements.
                                       3
<PAGE>





<TABLE>
<CAPTION>

Sound Federal Bancorp and Subsidiary

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 (In thousands)
                                                                                      For the Quarter Ended
                                                                                             June 30,
                                                                                      1999                 1998
                                                                             -------------------      ------------
<S>     <C>                                                                              <C>                   <C>
OPERATING ACTIVITIES
  Net income............................................................     $           661       $           746
  Adjustments to reconcile net income to net
      cash provided by operating activities:
         Provision for loan losses......................................                  25                    81
         Depreciation expense...........................................                  49                    36
            ESOP expense................................................                  48                    --
         Deferred income tax benefit....................................                 (10)                 (170)
         Gain on sale of real estate owned..............................                 (81)                   --
         Other adjustments, net.........................................                (141)                 (328)
                                                                                  ------------        -------------
            Net cash provided by operating activities...................                 551                   365
                                                                                  ------------        ------------



INVESTING ACTIVITIES Purchases of securities:
      Available-for-sale................................................             (12,430)                   --
      Held-to-maturity..................................................                  --                (5,578)
  Proceed from principal payments, maturities and calls of
        securities ....................................................                4,831                 4,905
  Disbursements for loan originations...................................             (15,563)              (10,113)
  Principal collection on loans.........................................               5,971                 8,102
  Net increase in certificates of deposit...............................              (1,090)                 (302)
  Proceeds from sale of real estate owned...............................                 240                    --
  Purchases of premises and equipment...................................                (404)                  (23)
                                                                                  -----------         -------------
            Net cash used in investing activities.......................             (18,445)               (3,009)
                                                                                  -----------         -------------

FINANCING ACTIVITIES
  Net increase in deposits..............................................                 3,652               2,287
  Net decrease in mortgage escrow deposits..............................                  (781)             (1,042)
  Dividends paid........................................................                  (365)                 --
                                                                                  -------------        -----------
            Net cash provided by financing activities...................                 2,506               1,245
                                                                                  -------------        -----------

  Decrease in cash and cash equivalents.................................               (15,388)             (1,399)
  Cash and cash equivalents at beginning of period......................                49,482              42,111
                                                                                  ------------         -----------
  Cash and cash equivalents at end of period............................     $          34,094      $       40,712
                                                                                  ============         ===========

SUPPLEMENTAL INFORMATION
  Interest paid.........................................................     $           2,237      $        2,256
  Income taxes paid.....................................................                   465                 740
                                                                                  ============         ===========


</TABLE>

See accompanying notes to the unaudited consolidated financial statements.

                                       4
<PAGE>


Sound Federal Bancorp and Subsidiary

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.   Reorganization and Stock Offering

         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  (the  "Bank")
   converted  from  a  federally  chartered  mutual  savings  association  to  a
   federally chartered stock savings  association (the  "Conversion").  The Bank
   became the wholly-owned subsidiary of Sound Federal Bancorp, which became the
   majority-owned   subsidiary  of  Sound  Federal,  MHC  (the  "Mutual  Holding
   Company").  Collectively,  Sound Federal Bancorp and the Bank are referred to
   herein as "the 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. The shares issued to other stockholders consist of
192,129 shares  purchased by the Company's  Employee  Stock  Ownership Plan (the
"ESOP")  using  $1.9  million  in  proceeds  from a loan  made by Sound  Federal
Bancorp;  102,200  shares  contributed  by the  Company to  establish  the Sound
Federal Savings and Loan  Association  Charitable  Foundation  (the  "Charitable
Foundation");  and 2,107,379  shares sold for cash of $21.1 million  ($10.00 per
share) in the Offering.  After deducting offering costs of $1.1 million, the net
cash proceeds from the Offering were $20.0 million.

         Sound  Federal  Bancorp  utilized  net proceeds of  approximately  $9.0
million to purchase all of the Bank's common  shares  issued in the  Conversion,
and  retained  the  remaining  $11.0  million  which was  invested  initially in
interest-bearing deposits with the Bank.

         The Charitable Foundation was established to provide funding to support
charitable and not-for-profit causes and community development activities in the
Company's  market area.  The fair value of the common shares  contributed to the
Charitable  Foundation ($1.0 million) was recognized as a charge to non-interest
expense at the contribution date (October 8, 1998).


2.       Basis of Presentation

         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
generally accepted accounting principles have been condensed or omitted pursuant
to the rules and  regulations  of the Securities  and Exchange  Commission.  The
Company  believes  that the  disclosures  are  adequate to make the  information
presented not misleading; however, the results for the periods presented are not
necessarily  indicative  of results to be  expected  for the entire  fiscal year
ending March 31, 2000.

         The consolidated  financial statements have been prepared in conformity
with generally  accepted  accounting  principles.  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,  1999,
included in the Company's 1999 Annual Report.

                                       5

<PAGE>

3.       Earnings Per Share

          Weighted  average  common shares of 5,048,908 were used in calculating
basic earnings per share for the quarter ended June 30, 1999. In computing basic
EPS,  outstanding shares include all shares issued to the Mutual Holding Company
and  contributed  to the Charitable  Foundation,  but exclude  unallocated  ESOP
shares that have not been committed to be released to participants.  The Company
has no  outstanding  stock options or other  contracts  that could result in the
issuance of additional  common  shares and,  accordingly,  diluted  earnings per
share has not been  presented.  The Company  completed  the  Reorganization  and
Offering on October 8, 1998. As a result,  per share data has not been presented
for the quarter ended June 30, 1998.


4.       Allowance for Loan Losses

         The  allowance  for loan losses is  increased  by  provisions  for loan
losses charged to income and decreased by charge-offs (net of recoveries). Loans
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 evaluation of the
adequacy of the allowance is based on the Company's past loan experience,  known
and inherent  risks in the  portfolio,  adverse  situations  that may affect the
borrowers' ability to repay, the estimated value of underlying  collateral,  and
current  economic  conditions.  Management  believes that the allowance for loan
losses is adequate to absorb probable losses in the existing loan portfolio.

           Establishing  the  allowance  for loan  losses  involves  significant
management  judgements  utilizing the best information  available at the time of
review.  Those  judgements  are  subject to further  review by various  sources,
including  the  Company's  regulators.  Adjustments  to  the  allowance  may  be
necessary  in the future  based on changes in economic  and real  estate  market
conditions,  further  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>

                                               Quarter Ended              Year Ended
                                                   June 30,               March 31,
                                            1999            1998            1999
                                       -------------   -------------      ----------
                                                     (dollars in thousands)
<S>                                    <C>             <C>             <C>
Balance at beginning of period....     $     1,094     $       984     $        984
Provision for loan losses.........              25              81              272
Mortgage loans charged off........              --              --            (162)
Recoveries........................              --              --               --
                                         ---------       ---------        ---------
Balance at end of period..........     $     1,119     $     1,065     $      1,094
                                         =========       ==========       =========
Ratio of net  charge-offs  to average
   net loans outstanding (annualized)           --%              --%          0.12%
                                         =========       ==========       =========

</TABLE>






                                       6

<PAGE>


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

General

         The  financial  condition  and results of operations of the Company are
primarily  dependent upon those of the Bank. The Bank's  principal  business has
historically  consisted  of offering  savings and other  deposits to the general
public  and  using the  funds  from  such  deposits  to make  loans  secured  by
residential real estate.  The Company's  results of operations  depend primarily
upon its net  interest  income,  which is the  difference  between the  interest
income  earned  on its loan and  securities  portfolios  and its cost of  funds,
consisting  primarily of the interest paid on its  deposits.  Net income is also
affected by, among other  things,  provisions  for loan losses and  non-interest
expense.  The  Company's  principal  operating  expenses,  other  than  interest
expense, consist of compensation and benefits,  occupancy and equipment, federal
deposit insurance costs and other general and administrative expenses. Operating
results are also  significantly  affected 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,  competition,
and  uncertainties  related to year 2000. 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.


Capability of the Company's Data Processing to Accommodate the Year 2000

         Like most  providers of  financial  services,  the Company  relies upon
computers  for  the  daily  conduct  of its  business  and for  data  processing
generally.  There is a concern that on January 1, 2000  computers will be unable
to "read" the new year and, as a consequence,  there may be widespread  computer
malfunctions.  Management  has  developed a formal plan to resolve the Year 2000
issue and has been  addressing  this issue with the  Company's  data  processing
service center (the "Data Center"). The Data Center has advised the Company that
the Year 2000 issue should not affect the Company's  external  data  processing.
The Company is in the process of testing its computer  applications and hardware
to  ensure  that  they  will be able to read the  year  2000.  The  Data  Center
completed the first phase of testing,  and identified  certain problem areas and
failed tests.  These exceptions were addressed,  and the second phase of testing
was  completed  in March 1999.  The Data  Center and the Company  then began the
final phase of testing  which was  completed  in April 1999.  All tests have now
been completed with satisfactory results.

         The  Company  completed  its  contingency  plan in May  1999.  The plan
includes, among other things, various strategies to deal with loss of electrical
power,   telecommunications,   and  Data  Center  failures.   The  Plan  assigns
responsibilities  to members of a recovery team and  establishes  time-frames to
provide for the Company to be able to service  customers on January 3, 2000 (the
first business day of the year).


                                       7
<PAGE>

         The Company has contacted each of its other vendors to ensure that they
will be able to provide  service in light of the Year 2000 issue.  Substantially
all vendors have  represented  to management  that they are  addressing the Year
2000 issue and expect to be able to provide the  services  for which the Company
has contracted.  In addition,  since over 99% of the Company's loans are secured
by real property (primarily residential property),  the ability of the Company's
borrowers to be Year 2000 compliant is not a material  concern.  Management will
continue  to  monitor  this  issue and  report to the  Board of  Directors  on a
quarterly basis until full compliance is obtained from all vendors.

         Costs  related to the Year 2000 issue are  expensed as incurred  except
for the costs,  if any, for new hardware and software that is  purchased,  which
are capitalized.  At June 30, 1999, the cumulative costs incurred to address the
Year 2000 issue amounted to approximately $163,000. The Company anticipates that
the total costs for this project will be  approximately  $400,000.  The costs of
the Year 2000  project  are based on  management's  best  estimates,  which were
derived utilizing numerous  assumptions of future events including the continued
availability  of certain  resources,  third party  modification  plans and other
factors.  However,  there  can be no  guarantee  that  these  estimates  will be
achieved,  and actual results could differ materially from those plans. Specific
factors that might cause such material  differences include, but are not limited
to, the  availability and cost of trained  personnel,  the ability to locate and
correct all relevant  computer codes,  and similar  uncertainties.  In addition,
there can be no  guarantee  that the  systems  of other  companies  on which the
Company's systems rely will be timely converted, or that a failure to convert by
another  company  (or a  conversion  that is  incompatible  with  the  Company's
systems), would not have a material adverse effect on the Company.


Stock Repurchase Program

         The Company  announced  on July 6, 1999 that it is  commencing  a stock
repurchase  program to acquire up to 344,926 shares of its common stock,  which
represents  approximately 15% of the common stock held by persons other than the
Mutual Holding Company.

         The repurchases are generally  effected through open market  purchases,
although the Company may consider unsolicited  negotiated  transactions or other
types of repurchases.  No shares will be repurchased  from directors or officers
of the Company. The price to be paid for the shares purchased on the open market
will not exceed the greater of the highest  independent bid or independent sales
price of the Company's  common stock on the Nasdaq Market.  The number of shares
to be purchased in the open market during any day generally is not to exceed 25%
of the  average  daily  trading  volume of the  common  stock,  except for block
purchases.  As of August 9,  1999,  the  Company  repurchased  a total of 45,000
shares of common stock at a cost of $464,375.


Financial Condition

         The Company's  total assets were $298.1  million and $295.3  million at
June 30 and March 31, 1999,  respectively.  The asset growth of $2.8 million was
funded primarily by a $3.6 million  increase in deposits.  The increase in total
assets  reflects a $9.6  million  increase in net loans to $153.1  million and a
$6.7 million increase in total securities to $91.7 million at June 30, 1999. The
growth in the loan and securities  portfolios was funded by the deposit  growth,
as well as a decrease of $16.4 million in Federal funds reflecting the Company's
ongoing strategy to redeploy short-term liquid assets into higher yielding loans
and securities.  Total deposits  amounted to $240.9 million at June 30, 1999, as
compared  to  $237.3  million  at March 31,  1999.  Total  stockholders'  equity
amounted to $54.8 million at June 30, 1999 as compared to $55.0 million at March
31, 1999. The slight  decrease in  stockholders'  equity reflects an increase in
accumulated other comprehensive loss, net of taxes, to $650,000 at June 30, 1999
from $132,000 at March 31, 1999.

                                       8

<PAGE>

Results of Operations

         General.  The Company  reported  net income of $661,000 for the quarter
ended June 30, 1999, as compared to net income of $746,000 for the quarter ended
June 30, 1998.  The  decrease in net income was due  primarily to an increase in
non-interest  expenses  of  $611,000,  partially  offset by an  increase  in net
interest income of $297,000 and a $93,000 decrease in income tax expense.

         Net Interest Income. Net interest income for the quarter ended June 30,
1999 amounted to $2.6 million,  a $297,000  increase from the same period in the
prior  year.  The  Company's  interest  rate  spread was 3.01% and 3.28% for the
quarters ended June 30, 1999 and 1998, respectively.  The Company's net interest
margin for those periods was 3.61% and 3.70%, respectively. The decreases in the
interest  rate  spread  and net  interest  margin  are a result  of the  general
decrease  in interest  rates on loans and  mortgage-backed  securities.  The low
interest  rates  during the past year have caused many  homeowners  to refinance
existing  homes and has  created  demand for loans to purchase  new homes.  Most
customers have opted for fixed rate loans which is the Bank's  primary  mortgage
product.  This  resulted in the overall  growth of the loan  portfolio  but this
growth  was at  lower  interest  rates  than the  existing  loan  portfolio.  In
addition,  the  low  interest  rates  resulted  in  accelerated  prepayments  of
mortgage-backed  securities. The cash flows from mortgage-backed securities were
also reinvested at lower rates than the existing securities portfolio.

         Interest  Income.  Interest  income totaled $4.8 million in the quarter
ended June 30, 1999 as compared to $4.5 million for the same period in the prior
year.   This   increase  is  due  to  a  $39.4   million   increase  in  average
interest-earning assets to $287.0 million during the quarter ended June 30, 1999
as compared to $247.6 million for the same quarter in the prior year,  partially
offset by a 62 basis point  decrease in the  average  yield on  interest-earning
assets to 6.74%. The increase in the average balance of interest-earning  assets
was due to investment of funds from deposit  growth during the past year and the
Offering proceeds.

         Interest income on loans increased $135,000 or 4.9% to $2.9 million for
the current  quarter,  due primarily to a $18.1 million  increase in the average
balance to $148.0  million.  The increase in the average  balance was  partially
offset by a 67 basis point decrease in the yield earned to 7.78% for the quarter
ended June 30,  1999 as  compared  to the same  quarter in the prior  year.  The
growth of the loan  portfolio is a result of the low interest rate  environment,
which has created a strong  demand for fixed rate loans (the  Company's  primary
mortgage loan product). The low interest rates have also created a strong market
for  home  purchases  and the  refinancing  of  existing  mortgage  loans in the
Company's market area. The new loan production and the refinancing activity were
also the primary  reasons for the decrease in the yield earned on mortgage loans
since the rates on these loans are lower than those of the existing portfolio.

         Interest income on mortgage-backed  securities amounted to $851,000 for
the quarter  ended June 30, 1999 as compared to $873,000 for the same quarter in
1998.  This  decrease is due to a 63 basis point  decrease in the average  yield
earned to 5.91%  partially  offset by a $4.2  million  increase  in the  average
balance to $57.7 million.  Many of these  mortgage-backed  securities have rates
that adjust annually, typically based on Treasury bill rates. As a result, these
securities  have also  experienced  declining  yields.  In  addition,  principal
prepayments have resulted in declining yields on the mortgage-backed  securities
portfolio from the acceleration of premium amortization.

         Interest on other  securities  increased  $266,000 to $491,000  for the
quarter  ended June 30, 1999 as compared  to  $225,000  for the same  quarter in
1998. The average balance of other  securities was $32.2 million for the quarter
ended June 30,  1999 as compared  to $15.0  million for the same  quarter in the
prior year and the average yield earned increased 11 basis points to 6.12%.

         Interest earned on federal funds decreased  $87,000 to $407,000 for the
1999 quarter as compared to $494,000 for the quarter  ended June 30, 1998.  This
decrease is due to a $750,000  decrease in the average

                                       9

<PAGE>

balance to $34.2  million as compared to $35.0  million for the same  quarter in
1998. In addition,  the yield earned on federal funds  decreased 90 basis points
to 4.77% as compared to 5.67% in 1998.

          Interest   income  on  certificates  of  deposit  at  other  financial
institutions  amounted  to  $158,000  for the  quarter  ended  June 30,  1999 as
compared  to $178,000  for the same  quarter in the prior  year.  This  decrease
reflects a 60 basis point  decrease in the average  yield  earned to 5.54% and a
$202,000  decrease in the average  balance to $11.4 million for the 1999 quarter
from $11.6 million for the same quarter in 1998.

         Interest Expense.  Interest expense for the quarter ended June 30, 1999
totaled $2.2 million as compared to $2.3 million for the quarter  ended June 30,
1998.  The  average  balance of  interest-bearing  liabilities  increased  $18.0
million  to $240.5  million  for the  quarter  ended June 30,  1999 from  $222.5
million  for the same  quarter in the prior  year.  The  increase in the average
balance is due primarily to a $17.9 million  increase in the average  balance of
deposits to $238.8  million.  The average cost of  interest-bearing  liabilities
decreased  34 basis  points  to 3.73% for the  quarter  ended  June 30,  1999 as
compared to the same quarter in the prior year.

         Interest on time deposits  totaled $1.7 million for the current quarter
as  compared  to $1.6  million for the same  quarter in 1998.  This  increase is
primarily a result of a $16.8 million or 14.0%  increase in the average  balance
of time  deposits  to $137.3  million  for the  quarter  ended June 30,  1999 as
compared to the same  quarter in 1998.  The  increase in the average  balance of
time deposits was partially  offset by a 45 basis point  decrease in the average
cost to 4.93%. Total interest expense on other deposit accounts (passbook, club,
money market and NOW  accounts)  amounted to $539,000 for the quarter ended June
30, 1999 as compared to  $632,000  for the same  quarter in the prior year.  The
average  balance of these  accounts  was $101.5  million for the 1999 quarter as
compared to $100.5 million for the same quarter in 1998, and the overall average
rate was 2.13% and 2.52% for the respective periods.

         Provision  for Loan Losses.  The  provision for loan losses was $25,000
for the quarter ended June 30, 1999 as compared to $81,000 for the quarter ended
June 30, 1998. Non-performing loans amounted to $817,000 or 0.53% of total loans
at June 30, 1999 as  compared  to $1.1  million or 0.75% of total loans at March
31,  1999  and $1.5  million  or 1.11%  of  total  loans at June 30,  1998.  The
allowance  for loan losses  amounted to $1.1  million at June 30, 1999 and March
31, 1999. There were no loan charge-offs during the quarters ended June 30, 1999
and 1998.

         In  determining   the  adequacy  of  the  allowance  for  loan  losses,
management   considers   historical   loan   loss   experience,   the  level  of
non-performing  loans,  the  volume and type of lending  conducted  and  general
economic conditions in the Company's market area. Although the Company maintains
its  allowance  for loan losses at a level which it  considers to be adequate to
provide for probable  losses on existing  loans,  there can be no assurance that
such losses will not exceed the current estimated amounts.  As a result,  higher
provisions  for loan  losses may be  necessary  in future  periods  which  would
adversely affect operating results.

         Non-Interest  Income.  Non-interest  income  totaled  $130,000  for the
quarter  ended June 30, 1999 as  compared to $50,000 for the quarter  ended June
30, 1998. The $80,000 increase primarily reflects an $81,000 gain on the sale of
real  estate  owned  in  the  current  quarter.   Service  fees,  which  consist
principally of service  charges on deposit  accounts,  late charges on loans and
various  other  service  fees,  amounted to $49,000 and $50,000 for the quarters
ended June 30, 1999 and 1998, respectively.

         Non-Interest Expense. Non-interest expense totaled $1.6 million for the
quarter  ended June 30, 1999 as compared to $994,000 for the quarter  ended June
30,  1998.  Compensation  and  benefits  increased  $193,000  to $735,000 in the
quarter  ended June 30, 1999 as  compared to $542,000 in the quarter  ended June
30, 1998.  The increase in  compensation  and  benefits was  primarily

                                       10
<PAGE>

due to a $132,000 increase in salaries and $52,000 in expense  recognized in the
current  quarter for the Bank's ESOP which did not exist in the first quarter of
the prior year. The increase in salaries is due to staffing increases attributed
primarily to the new branch that was opened in December 1998 and a branch office
in Greenwich,  Connecticut that is expected to open in September 1999. Occupancy
and equipment  increased  $136,000 to $193,000 due primarily to expenses related
to the new  branch  locations  and a refund  of real  estate  taxes in 1998 as a
result of certiorari proceedings. Other non-interest expenses increased $198,000
to $465,000 for the quarter  ended June 30, 1999 as compared to the same quarter
in 1998.  This  increase is due  primarily to  professional  fees related to the
establishment  of  a  real  estate  investment  trust  ("REIT").  The  REIT  was
established in April 1999 to provide a lower  effective tax rate for fiscal year
2000 and  beyond.  The  increase  in other  non-interest  expense is also due to
additional costs related to operations as a public company and costs incurred in
establishing the new branches.

         Income Taxes.  Income tax expense  amounted to $424,000 for the quarter
ended June 30, 1999 as compared  to  $517,000 in the same  quarter in 1998.  The
effective tax rates for those same periods were 39% and 41%, 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 Bank is required to  maintain  an average  daily  balance of liquid
assets as a percentage of net  withdrawable  deposit  accounts  plus  short-term
borrowings  as defined by the  regulations  of the Office of Thrift  Supervision
("OTS"). The minimum required liquidity ratio is currently 5%. At June 30, 1999,
the Bank's liquidity ratio under OTS regulations was approximately 32%.

         The primary investing  activities of the Company are the origination of
loans and the purchase of  securities.  For the quarter  ended June 30, 1999 and
for the year ended March 31, 1999, the Company  originated  loans totaling $15.6
million  and $44.2  million,  respectively.  The Company  purchased  securities,
including  mortgage-backed  securities,  totaling  $12.4 million for the quarter
ended June 30, 1999 and $47.3 million for the year ended March 31, 1999.

         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 June 30, 1999, the Company had outstanding loan commitments of $21.7
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 June 30, 1999, totaled $125.5 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. In
determining  the amount of  risk-weighted  assets for purposes of the risk-based
capital requirement, a
                                       11
<PAGE>

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
regulation  based on the risks OTS  believes are inherent in the type of assets.
At June 30, 1999,  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
calculated at June 30, 1999.  The Bank's  capital level  reflects the receipt of
$9.0 million from Sound Federal Bancorp for the Bank's issuance of common stock,
equal to 50% of the net  proceeds  received in the  Offering.  Accordingly,  the
actual  capital  amounts and ratios set forth  below 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)
June 30, 1999
<S>                                   <C>              <C>       <C>              <C>        <C>         <C>
Tangible capital....................  $   44,198       14.8%     $   4,481        1.5%
Tier I (core) capital...............      44,198       14.8         11,949        4.0     $   14,936     5.0%
Risk-based capital:
   Tier I...........................      44,198        38.2                                   6,944     6.0
   Total............................      45,249        39.1         9,259        8.0         11,573    10.0

March 31, 1999
Tangible capital....................  $   43,551       14.8%     $   4,439        1.5%
Tier I (core) capital...............      43,551       14.8          8,878        3.0     $   14,796     5.0%
Risk-based capital:
   Tier I...........................      43,551       38.3                                    6,820     6.0
   Total............................      44,577       39.2          9,094        8.0         11,367    10.0

</TABLE>








                                       12
<PAGE>







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, is also subject to risks associated with the local economy.
The Company does not own any trading  assets.  At June 30, 1999, 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  June 30,  1999,  there were no  significant
changes in the Company's assessment of market risk.


                                       13
<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

         None.


Item 5.  Other Information

         None.


Item 6.  Exhibits and Reports on Form 8-K

                           (a)      Exhibit 27--Financial Data schedule*


                           (b)      Reports on Form 8-K

                                    None


               * Submitted only with filing in electronic format.

                                       14

<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
                                         ---------------------------------------
                                         (Registrant)




                                         By:      /s/ Anthony J. Fabiano
                                            Anthony J. Fabiano
                                            Duly Authorized and Chief Financial
                                            and Accounting Officer
August 10, 1999