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, 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
         Class                                         Outstanding at
     Common Stock,                                   February 10 , 2000
    par value, $0.10                                     5,010,218


<PAGE>



                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                         PART I -- FINANCIAL INFORMATION
                         _______________________________
<S>      <C>                                                                                                     <C>
Item 1.  Financial Statements (Unaudited)


         Consolidated Balance Sheets at December 31, 1999 and March 31, 1999......................................1

         Consolidated Statements of Income for the quarters and nine months
         ended December 31, 1999 and 1998.........................................................................2

         Consolidated Statement of Changes in Stockholders' Equity  for the nine months
         ended December 31, 1999..................................................................................3

         Consolidated Statements of Cash Flows for the nine months
         ended December 31, 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................................................................................... 8

Item 3.  Quantitative and Qualitative Disclosures about Market Risk..............................................15


                          PART II -- OTHER INFORMATION
                          ____________________________

Item 1.  Legal Proceedings.......................................................................................16

Item 2.  Changes in Securities and Use of Proceeds...............................................................16

Item 3.  Defaults upon Senior Securities.........................................................................16

Item 4.  Submission of Matters to a Vote of Security Holders.....................................................16

Item 5.  Other Information.......................................................................................16

Item 6.  Exhibits and Reports on Form 8-K........................................................................16

         Signatures..............................................................................................17
</TABLE>

<PAGE>



Part 1. - Financial Information
_______________________________

Item 1.  Financial Statements

Sound Federal Bancorp and Subsidiary
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
<S>                                                                                  <C>                    <C>
(Unaudited)
( Dollars in thousands, except per share data)                                           December 31,         March 31,
                                                                                             1999               1999
                                                                                     --------------------   ------------

Assets
 Cash and due from banks.......................................................      $           8,531   $        5,082
 Federal funds sold...................................................                          26,000           44,400
 Certificates of deposit.......................................................                 11,074           10,686
 Securities:
    Available-for-sale, at fair value..........................................                 57,270           39,402
    Held-to-maturity, at amortized cost (fair value of $36,555 and $45,087   at
       December 31, 1999 and March 31, 1999, respectively).....................                 37,561           45,590
                                                                                          ------------     ------------
          Total securities.....................................................                 94,831           84,992
                                                                                          ------------     ------------

 Loans, net:
     Mortgage loans............................................................                173,916          143,626
     Consumer loans............................................................                    914            1,004
     Allowance for loan losses (Note 4)........................................                 (1,169)          (1,094)
                                                                                          -------------   -------------
          Total loans, net.....................................................                173,661          143,536
                                                                                          ------------     ------------

 Accrued interest receivable...................................................                  2,028            1,436
 Federal Home Loan Bank stock..................................................                  1,884            1,884
 Premises and equipment, net...................................................                  3,794            1,935
 Other assets..................................................................                  2,023            1,360
                                                                                          ------------      -----------
           Total assets........................................................      $         323,826  $       295,311
                                                                                          ============     ============

Liabilities and Stockholders' Equity
  Liabilities:
      Deposits.................................................................      $         267,548    $     237,279
      Mortgagors' escrow funds................................................                   2,762            2,480
      Accrued expenses and other liabilities...................................                  1,406              568
                                                                                          ------------      -----------
         Total liabilities.....................................................                271,716          240,327
                                                                                          ------------      -----------
  Stockholders' equity:
     Preferred stock ($0.01 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).................................................................                    521              521
     Additional paid-in capital................................................                 22,424           22,430
     Treasury stock, at cost (202,000 shares at December 31, 1999).............                 (2,025)              --
     Common stock held by Employee Stock Ownership Plan ("ESOP") ..............                 (1,537)          (1,681)
     Recognition and Retention Plan ("RRP") stock awards.......................                   (769)              --
     Retained earnings.........................................................                 34,733           33,846
     Accumulated other comprehensive loss, net of taxes (Note 5)...............                 (1,237)            (132)
                                                                                          ------------       -----------
         Total stockholders' equity............................................                 52,110            54,984
                                                                                          ------------       -----------
         Total liabilities and stockholders' equity............................      $         323,826    $      295,311
                                                                                          ============       ===========
</TABLE>


See accompanying notes to the unaudited consolidated financial statements.

                                       1
<PAGE>


<TABLE>
<CAPTION>

Sound Federal Bancorp and Subsidiary

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)

                                                                     For the Quarter Ended           For the Nine Months Ended
                                                                         December  31,                    December 31,
                                                                     ---------------------           -------------------------
                                                                     1999           1998             1999            1998
                                                                     --------      ----------        --------       ---------
<S>                                                                  <C>            <C>              <C>             <C>
   Interest and Dividend Income
    Loans.....................................................   $      3,219    $      2,791     $     9,051   $      8,263
    Mortgage-backed and other securities......................          1,506           1,003           4,266          3,141
    Federal funds sold and certificates of deposit............            526             860           1,604          2,271

    Other earning assets......................................             44              39             136            130
    Total interest and dividend income........................          5,295           4,693          15,057         13,805


   Interest Expense
    Deposits..................................................          2,598           2,278           7,146          6,839
     Other interest-bearing liabilities.......................             11              14              35             61
    Total interest expense....................................          2,609           2,292           7,181          6,900

    Net interest income.......................................          2,686           2,401           7,876          6,905
    Provision for loan losses (Note 4)........................             25              71              75            222
    Net interest income after provision for loan losses.......          2,661           2,330           7,801          6,683

   Non-Interest Income
     Service charges and fees.................................             51              44             151            133
     Gain (loss) on sale of real estate owned.................             (5)             --              76             --
     Total non-interest income................................             46              44             227            133

   Non-Interest Expense
     Compensation and benefits................................            976             793           2,507          2,073
     Occupancy and equipment..................................            233             157             661            305
     Data processing service fees.............................            159             100             314            220
     Advertising and promotion................................            192              54             388            122
     Other....................................................            448             285           1,456            796
    Contribution of common stock to the Sound Federal
        Savings and Loan Association Charitable Foundation....             --           1,022              --          1,022
     Total non-interest expense...............................          2,008           2,411           5,326          4,538

    Income (loss) before income tax expense...................            699             (37)          2,702          2,278
    Income tax expense........................................            250              57             965            960
    Net income (loss).........................................   $        449    $        (94)   $      1,737   $      1,318

    Basic and diluted earnings (loss) per common share
   (Note 3)...................................................   $       0.09    $      (0.02)   $       0.35

</TABLE>

See accompanying notes to the unaudited consolidated financial statements.




                                       2
<PAGE>


Sound Federal Bancorp and Subsidiary
<TABLE>
<CAPTION>

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Nine months Ended December 31, 1999  (Unaudited)  (Dollars in thousands,
except per share data)



                                                                                           Common
                                                               Additional                  Stock          RRP
                                                    Common      Paid-In      Treasury     Held By        Stock       Retained
                                                    Stock       Capital       Stock         ESOP        Awards       Earnings
                                                    -----       -------       -----         ----        ------       --------
<S>                                                <C>          <C>           <C>       <C>          <C>           <C>
Balance at March 31, 1999.....................     $  521       $ 22,430      $   --    $   (1,681)  $       --    $    33,846
Net income....................................         --            --           --           --                        1,737
Other comprehensive loss (Note 5).............         --            --           --           --            --             --

  Total comprehensive income (Note 5).........
Dividends declared ($0.21 per share)..........         --            --            --          --            --           (850)
Repurchase of common stock (202,000 shares)...         --            --        (2,025)         --            --             --
Award of RRP shares...........................         --            --            --          --          (961)            --
Vesting of RRP shares.........................         --            --            --          --           192             --
ESOP shares committed to be released for
   allocation.................................         --             (6)          --          144           --              --
                                                   -------    -----------------------      -------      ----------    --------

Balance at December 31, 1999..................   $    521     $   22,424      $(2,025)  $   (1,537)  $       (769) $    34,733
                                                  =======       ========      ========     ========     ==========    ========

</TABLE>




<TABLE>
<CAPTION>

                                                   Accumulated
                                                     Other            Total
                                                  Comprehensive    Stockholders'
                                                      Loss            Equity
                                                     ----            ------
<S>                                                  <C>            <C>
Balance at March 31, 1999.....................  $    (132)     $      54,984
Net income...................................          --              1,737
Other comprehensive loss (Note 5)............       (1,105)           (1,105)
                                                                  ----------
  Total comprehensive income (Note 5)........                            632
Dividends declared ($0.21 per share).........           --              (850)
Repurchase of common stock (202,000 shares)..                         (2,025)
Award of RRP shares..........................           --              (961)
Vesting of RRP shares........................           --               192
ESOP shares committed to be released for
   allocation................................           --               138
                                                  ----------        ---------

Balance at December 31, 1999.................   $   (1,237)    $      52,110
                                                  ==========        ==========



</TABLE>
See accompanying notes to the unaudited consolidated financial statements.


<PAGE>


Sound Federal Bancorp and Subsidiary
<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 (In thousands)
                                                                                    For the Nine Months Ended
                                                                                           December 31,
                                                                                ----------------------------------
                                                                                      1999                 1998
                                                                                -------------------   ------------
OPERATING ACTIVITIES
<S>                                                                          <C>                   <C>
  Net income............................................................     $         1,737       $         1,318
  Adjustments to reconcile net income to net cash provided
      by operating activities:
      Contribution of common stock to the Sound Federal Savings and
           Loan Association Charitable Foundation.......................                  --                 1,022
      Provision for loan losses.........................................                  75                   222
      Depreciation expense..............................................                 177                   117
      ESOP and RRP expense..............................................                 330                   185
      Deferred income tax expense (benefit).............................                 128                   (15)
      Gain on sale of real estate owned.................................                 (76)                   --
      Other adjustments, net............................................                (646)                 (772)
                                                                                  ------------        -------------
            Net cash provided by operating activities...................               1,725                 2,077
                                                                                  ------------        ------------


INVESTING ACTIVITIES Purchases of securities:
      Available-for-sale................................................             (29,266)              (19,776)
      Held-to-maturity..................................................                  --                (9,976)
  Proceeds from principal payments, maturities and calls of
        securities ....................................................               17,510                20,338
  Disbursements for loan originations...................................             (49,513)              (30,051)
  Principal collection on loans.........................................              19,215                19,842
  Net increase in certificates of deposit...............................                (388)                1,391
  Proceeds from sale of real estate owned...............................                 309                    --
  Purchases of premises and equipment...................................              (2,036)                 (263)
                                                                                  -----------         -------------
            Net cash used in investing activities.......................             (44,169)              (18,495)
                                                                                  -----------         -------------

FINANCING ACTIVITIES
  Net increase in deposits..............................................                30,269               9,788
  Net increase (decrease) in mortgage escrow deposits...................                   282                 (10)
  Dividends paid........................................................                  (850)                 --
  Purchase of treasury stock............................................                (2,025)                 --
  RRP stock awards funded through stock purchases.......................                  (183)                 --
  Net proceeds from stock offering......................................                    --              20,022
                                                                                  -------------        -----------
            Net cash provided by financing activities...................                27,493              29,800
                                                                                  -------------        -----------

  (Decrease) increase in cash and cash equivalents......................               (14,951)             13,382
  Cash and cash equivalents at beginning of period......................                49,482              42,111
                                                                                  ------------         -----------
  Cash and cash equivalents at end of period............................     $          34,531      $       55,493
                                                                                  ============         ===========

SUPPLEMENTAL INFORMATION
  Interest paid.........................................................     $           7,020      $        6,838
  Income taxes paid.....................................................                 1,543               1,360
   Liability for RRP awards not yet funded through stock purchases......                   778                  --
   Loans transferred to real estate owned...............................                   124                 357
                                                                                  ============         ===========
</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.

         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 4,813,259 and 4,974,235 were used in
calculating  basic  earnings  per share for the quarter  and nine  months  ended
December 31, 1999,  respectively.  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  and unvested stock awards pursuant to
the Bank's  Recognition  and Retention  Plan. For purposes of computing  diluted
earnings per share,  weighted  average  shares were  4,814,277 and 4,979,463 and
included common stock equivalents of 1,018 shares and 5,228 shares for the
quarter and nine months ended December 31, 1999, respectively.


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                 Nine Months Ended              Year Ended
                                                 December 31,                    December 31,               March 31,
                                       ------------------------------  ------------------------------       ---------
                                            1999            1998            1999           1998               1999
                                       -------------   -------------   -------------  ------------            ----
                                                               (in thousands)
<S>                                    <C>             <C>             <C>            <C>              <C>
Balance at beginning of period....     $     1,144     $     1,062     $     1,094    $       984      $           984
Provision for loan losses.........              25              71              75            222                  272
Mortgage loans charged off........              --              --              --            (73)                (162)
                                         ----------      ----------      ---------      ----------          -----------
Balance at end of period..........     $     1,169     $     1,133     $     1,169    $     1,133     $          1,094
                                         =========       =========       =========      =========      ===============
</TABLE>


                                       6

<PAGE>


5.       Comprehensive Income (Loss)

           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.  The components are as follows
for the periods indicated.



<TABLE>
<CAPTION>

                                                                                                      Other
                                                   Pre-Tax                  Tax                   Comprehensive
                                                    Loss                   Effect                      Loss
                                              --------------        ------------------      --------------------
Quarter Ended:                                                          (in thousands)
<S>                                         <C>                    <C>                     <C>
   December 31, 1999                        $        (570)         $         219           $           (351)
   December 31, 1998                                  (45)                    18                        (27)

Nine months Ended:
   December 31, 1999                               (1,847)                   742                     (1,105)
   December 31, 1998                                  (55)                    22                        (33)
</TABLE>



         Total comprehensive  income (net income and other comprehensive  income
or loss)  amounted to $98,000 and  $632,000,  respectively,  for the quarter and
nine months ended  December  31, 1999.  Total  comprehensive  income  (loss) was
($121,000) and $1,285,000,  respectively,  for the quarter and nine months ended
December 31, 1998.

         The Company's  accumulated other  comprehensive loss, which is included
in   stockholders'   equity,   represents  the  unrealized  loss  on  securities
available-for-sale  of $2.1  million and $223,000 at December 31, 1999 and March
31,  1999,  respectively,  less  related  income  taxes of $833,000 and $91,000,
respectively.




















                                      7
<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,  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  Board;  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.


 Year 2000 Status

         Like most  providers of  financial  services,  the Company  relies upon
computers  for  the  daily  conduct  of its  business  and for  data  processing
generally.  There was a concern that on January 1, 2000  computers  would not be
able to "read" the new year and, as a consequence,  they would malfunction.  The
operating  systems of the Company have been  performing  properly since December
31,  1999  and  there  have  been no  interruptions  in the  Company's  business
operations.  In addition,  the Company is not  currently  aware of any Year 2000
issues that have adversely affected third parties relied upon by the Company for
its  daily  transaction  processing  and  other  technology  needs.   Management
recognizes,  however,  that the  possibility  exists that adverse effects of the
Year 2000  issue may come to light in the future  and will  continue  to monitor
this issue accordingly.

         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 December 31, 1999, the cumulative costs incurred to address
the Year 2000 issue  amounted to  approximately  $186,000.  Based on the present
status of the issue,  the  Company  does not  anticipate  incurring  any further
significant costs related to the Year 2000 issue.

                                       8

<PAGE>


Stock Repurchase Program

         On July 6, 1999 the Company began 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.  As of
December 31, 1999,  the Company had acquired  202,000 shares of its common stock
at a total  cost of  approximately  $2.0  million,  or an  average of $10.02 per
share.


Financial Condition

         The Company's  total assets were $323.8  million and $295.3  million at
December 31, 1999 and March 31, 1999,  respectively.  The $28.5 million increase
in assets was funded  primarily by a $30.3  million  increase in  deposits.  The
increase  in total  assets  reflects a $30.1  million  increase  in net loans to
$173.7 million and a $9.8 million increase in total securities to $94.8 million,
partially  offset by an $18.4 million  decrease in Federal funds.  The growth in
the securities  and loan  portfolios was funded by the deposit growth as well as
the decrease 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 $267.5  million at December 31,  1999,  as
compared to total  deposits of $237.3  million at March 31,  1999.  Total equity
decreased  $2.9  million to $52.1  million at  December  31, 1999 as compared to
$55.0  million at March 31, 1999,  primarily  due to a $2.0 million  increase in
treasury stock, a $1.1 million  increase in the after-tax net unrealized loss on
securities available for sale, a $769,000 net increase in stock awards under the
Sound Federal Savings and Loan  Association  Recognition and Retention Plan (the
"RRP") and the payment of cash dividends totaling  $850,000.  These decreases in
stockholders' equity were partially offset by net income of $1.7 million for the
nine months ended December 31, 1999.



Results of Operations

         General. The Company reported net income of $449,000 or $0.09 per share
for the quarter ended December 31, 1999, as compared to a net loss of $94,000 or
$0.02 per share for the quarter  ended  December 31,  1998.  The results for the
current quarter include a pre-tax charge of $193,000 attributable to the vesting
of a full 20% of total RRP shares  granted  during the quarter.  Net income for
the current  quarter would have been  approximately  $536,000 or $0.11 per share
assuming  quarterly  RRP expense of $48,500.  The results for the quarter  ended
December  31,  1998  included  a  $1,022,000   pre-tax  charge  related  to  the
contribution  of  102,200  shares  of the  Company's  common  stock to the Sound
Federal Savings and Loan Association  Charitable  Foundation (the "Foundation").
The  results  for the 1998  quarter  also  include a pre-tax  charge of $185,000
attributable to a full-year  contribution to the Bank's Employee Stock Ownership
Plan (the  "ESOP").  Since the  Company's  Offering was completed in the quarter
ended  December 31, 1998, and the ESOP plan year ends on December 31, the entire
cost was  charged to expense in that  quarter.  Net income for the 1998  quarter
would  have  been  approximately  $633,000  or $0.14  per  share  excluding  the
contribution to the Foundation and assuming quarterly ESOP expense of $46,000.

         For the nine  months  ended  December  31,  1999,  net  income was $1.7
million or $0.35 per share as  compared  to $1.3  million for the same period in
1998.  Assuming RRP expense of $145,500 for the nine-month period ended December
31,  1999  (rather  than a  full-year  expense),  net  income  would  have  been
approximately  $1.8  million  or $0.37  per  share.  For the nine  months  ended
December  31,  1998,  net income  would  have been  approximately  $2.0  million
excluding  the  contribution  to the  Foundation  and  assuming  ESOP expense of
$138,000 (rather than a full-year expense).

                                       9

<PAGE>


         Net Interest Income. Net interest income for the quarter ended December
31, 1999 amounted to $2.7 million,  a $285,000  increase from the same period in
the prior year.  The  interest  rate spread was 2.94% and 2.84% for the quarters
ended  December 31, 1999 and 1998,  respectively.  The net  interest  margin for
those  periods was 3.46% and 3.49%,  respectively.  The increase in the interest
rate  spread in the  current  quarter  was due to rising  interest  rates in the
second half of 1999 which resulted in an increase in the yields  earned on
securities and Federal  funds.  The yields earned on these assets have increased
faster than the cost of interest-bearing  liabilities.  However,  over time, the
difference in the yield earned on interest-earning  assets and the cost of funds
will diminish if interest rates continue to rise.

         For the nine months  ended  December  31,  1999,  net  interest  income
increased  $971,000 to $7.9  million as compared to the same period in the prior
year.  The interest rate spread was 2.97% for the nine months ended December 31,
1999 as compared  to 3.04% for the same  period in the prior  year.  For both of
those periods,  the net interest margin was 3.53%.  The decrease in the interest
rate  spread in the nine month  period is a result of the  general  decrease  in
interest rates on loans and securities,  and the increase in time deposits which
represented  58.3% of average  interest-bearing  liabilities for the nine months
ended  December 31, 1999 as compared to 54.0% for the same period last year. The
comparatively  low interest  rates during 1998 and the first half of 1999 caused
many  homeowners  to refinance  existing home  mortgages and created  demand for
loans to purchase new homes. Most customers opted for a fixed rate loan 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.  The  increases  in interest  rates since  mid-1999  have caused loan
demand to decrease.

         Interest  Income.  Interest  income  totaled  $5.3  million  during the
quarter ended  December 31, 1999 as compared to $4.7 million for the same period
in the prior year.  This increase is due to a $32.9 million  increase in average
interest-earning  assets to $307.5 million during the quarter ended December 31,
1999 as compared to $274.6  million for the same quarter in the prior year,  and
by a 5 basis point increase in the average yield on  interest-earning  assets to
6.83%. 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.

         For the nine months ended December 31, 1999,  interest income increased
$1.3 million or 9.1% to $15.1  million as compared to $13.8 million for the nine
months ended December 31, 1998. Average  interest-earning assets increased $36.1
million to $296.0  million  from $259.9  million for the  comparable  nine month
period last year. The increase in  interest-earning  assets was partially offset
by  a  30  basis  point   decrease  in  the  average   yield   earned  on  total
interest-earning assets to 6.75%.

         Loans.  Interest  income on loans  increased  $428,000 or 15.3% to $3.2
million for the current quarter as compared to $2.8 million for the same quarter
in 1998. This increase is due to a $30.3 million increase in the average balance
of loans to $168.6 million  partially offset by a 43 basis point decrease in the
yield earned to 7.57%.  The growth of the loan  portfolio is a result of the low
interest rate environment  during 1998 and the first half of 1999, which created
a strong  demand  for fixed  rate loans (the  Company's  primary  mortgage  loan
product). The low interest rates 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.  The increases in interest
rates since mid-1999 have caused loan demand to decrease.


         Interest  income on loans  totaled $9.1 million  during the nine months
ended December 31, 1999 as compared to $8.3 million for the same period in 1998.
The average  balance of loans  increased $23.9 million to $158.1 million and the
average yield earned decreased 57 basis points to 7.60%.

                                       10


<PAGE>


         Mortgage-Backed   Securities.   Interest   income  on   mortgage-backed
securities  amounted to  $826,000  for the quarter  ended  December  31, 1999 as
compared to $753,000 for the same quarter in 1998. This increase was due to a 29
basis  points  increase  in the yield  earned to 5.85% as  compared  to the same
quarter  last  year  and a $2.3  million  increase  in the  average  balance  of
mortgage-backed securities to $56.0 million from $53.7 million a year ago.

         For the nine  months  ended  December  31,  1999,  interest  income  on
mortgage-backed  securities amounted to $2.5 million as compared to $2.4 million
for the same period in the prior year.  The average  balance of  mortgage-backed
securities  increased $3.3 million to $56.6 million. The increase in the average
balance was partially offset by a 28 basis point decrease in the yield earned to
5.79%. Many of these mortgage-backed securities have rates that adjust annually,
typically based on Treasury bill rates. As a result,  these securities  repriced
to lower rates as interest  rates remained low during 1998 and the first half of
1999. In addition,  principal  prepayments  resulted in the  acceleration of the
amortization  of  premiums  on these  securities.  This also  reduced the yields
earned on the mortgage-backed securities portfolio.

         Other Securities.  Interest on other securities  increased  $430,000 to
$680,000 for the quarter ended December 31, 1999 as compared to $250,000 for the
same quarter in 1998. The average balance of other  securities was $42.6 million
for the quarter  ended  December  31, 1999 as compared to $15.8  million for the
same quarter in the prior year,  and the average yield earned  increased 4 basis
points to 6.34%.  The increase in the average  balance was due to the investment
of funds from  deposit  growth and the  Company's  ongoing  strategy to redeploy
short-term liquid assets into higher yielding loans and securities.


         Interest on other securities increased $1.1 million to $1.8 million for
the nine months  ended  December  31, 1999 as compared to $706,000  for the same
period in 1998.  The average  balance of other  securities was $37.6 million for
the nine months  ended  December  31, 1999 as compared to $15.2  million for the
same period in the prior year,  and the average yield earned  increased 17 basis
points to 6.35%.

         Federal Funds. Interest on Federal funds decreased $339,000 to $355,000
for the quarter ended December 31, 1999,  reflecting a $28.9 million decrease in
the average  balance to $25.2 million  which was partially  offset by a 51 basis
point increase in the average yield earned to 5.59%.

         Interest on Federal funds decreased $642,000 to $1.1 million during the
nine months  ended  December  31, 1999 as compared to $1.8  million for the same
period in 1998. This decrease is due to an $14.7 million decrease in the average
balance of Federal funds to $28.9  million and a 24 basis point  decrease in the
average  yield earned to 5.10%.  The decrease in the average  balance of Federal
funds  reflects the Company's  ongoing  strategy to redeploy  short-term  liquid
assets into higher yielding loans and securities.

         Certificates of Deposit.  Interest income on certificates of deposit at
other financial institutions amounted to $171,000 for the quarter ended December
31, 1999 as compared to $167,000  for the same  quarter in the prior year.  This
increase  reflects  a $1.9  million  increase  in the  average  balance to $11.9
million for the 1999 quarter as compared to the same quarter in 1998,  partially
offset by an 89 basis point decrease in the average yield earned to 5.69%.

         For the nine  months  ended  December  31,  1999,  interest  income  on
certificates of deposit at other financial  institutions amounted to $494,000 as
compared  to  $519,000  for the same  period in 1998.  The  decrease in interest
earned  is due to a 60 basis  point  decrease  in the  yield  earned  to  5.65%,
partially offset by a $580,000 increase in the average balance to $11.6 million.

         Interest  Expense.  Interest expense for the quarter ended December 31,
1999 totaled  $2.6  million,  as compared to $2.3 million for the quarter  ended
December 31, 1998. The average balance of interest-bearing liabilities increased
$36.5  million to $266.2  million for the quarter  ended  December 31, 1999 from

                                       11

<PAGE>


$229.7  million for the same quarter in the prior year,  and the average cost of
these liabilities decreased 5 basis points to 3.89%.

         Interest on time deposits  totaled $2.1 million for the current quarter
as  compared  to $1.6  million for the same  quarter in 1999.  This  increase is
primarily a result of a $34.7 million or 27.6%  increase in the average  balance
of time deposits to $160.2  million for the quarter  ended  December 31, 1999 as
compared to the same  quarter in 1998.  The  increase in the average  balance of
time  deposits was partially  offset by a 7 basis point  decrease in the average
cost to 5.14%.  This growth in time deposits reflects the openings of the Bank's
supermarket branch in December 1998 and the Greenwich branch in September 1999.

          Total  interest  expense on other deposit  accounts  (passbook,  club,
money  market and NOW  accounts)  amounted  to $522,000  for the  quarter  ended
December  31, 1999 as compared  to  $619,000  for the same  quarter in the prior
year.  The average  balance of these  accounts  was $103.6  million for the 1999
quarter as  compared  to $98.5  million  for the same  quarter in 1998,  and the
overall average rate was 2.00% and 2.49% for the respective periods.

         For the nine months ended December 31, 1999,  interest  expense totaled
$7.2  million as  compared to $6.9  million in the same  period  last year.  The
average balance of interest-bearing liabilities for these same periods increased
$23.6  million  and the average  cost of these  liabilities  decreased  23 basis
points to 3.78%.

         For the nine months ended December 31, 1999,  interest on time deposits
totaled  $5.5  million as compared to $4.9 million for the same quarter in 1998.
This increase is primarily a result of an $23.5 million  increase in the average
balance of time deposits to $146.8 million as compared to $123.3 million for the
same period in 1998.  The increase in the average  balance of time  deposits was
partially offset by a 32 basis point decrease in the average cost to 5.00%.

         Total interest expense on other deposit accounts (passbook, club, money
market and NOW  accounts)  amounted to $1.6  million  for the nine months  ended
December  31, 1999 as compared to $1.9  million for the same period in the prior
year.  The average  balance of these  accounts  was $102.8  million for the 1999
period  as  compared  to $100.7  million  for the same  period in 1998,  and the
overall average rate was 2.08% and 2.49% for the respective periods.

         Provision for Loan Losses. The provision for loan losses was $25,000 in
the quarter ended December 31, 1999 as compared to $71,000 for the quarter ended
December 31, 1998.  For the nine months  ended  December 31, 1999 and 1998,  the
provision for loan losses  amounted to $75,000 and $222,000,  respectively.  The
lower  provision for loan losses is appropriate in light of the Bank's  improved
asset  quality  compared  to prior  periods.  Non-performing  loans  amounted to
$809,000  or 0.46% of total  loans at  December  31,  1999,  as compared to $1.1
million or 0.75% of total loans at March 31,  1999 and $1.5  million or 1.06% of
total loans at December 31, 1998. The allowance for loan losses amounted to $1.2
million and $1.1 million at December 31, 1999 and March 31, 1999,  respectively.
The Company had no charge-offs or recoveries for the three and nine months ended
December 31, 1999, as compared to  charge-offs of $72,000 for both the three and
nine months ended December 31, 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.

                                       12


<PAGE>


         Non-Interest  Income.  Non-interest  income totaled $46,000 and $44,000
for the quarters  ended December 31, 1999 and 1998,  respectively.  For the nine
months ended December 31, 1999 and 1998,  non-interest  income totaled  $227,000
and $133,000, respectively. The 1999 nine month period included net gains on the
sale of  real  estate  owned  totaling  $76,000.  Non-interest  income  consists
principally of service  charges on deposit  accounts,  late charges on loans and
various other service fees.

         Non-Interest Expense. Non-interest expense totaled $2.0 million for the
quarter  ended  December  31, 1999 as  compared to $2.4  million for the quarter
ended  December 31, 1998.  This decrease is due primarily to the absence in 1999
of the $1.0 million contribution to the Foundation partially offset by increases
of $183,000 in  compensation  and  benefits,  $76,000 in occupancy and equipment
costs, $138,000 in advertising and promotion, and $163,000 in other non-interest
expenses.  The increase in  compensation  and  benefits is due  primarily to the
$193,000  charge related to the RRP. The RRP was approved by stockholders of the
Company  in October  1999 and  provides  for  awards of common  stock to certain
employees and Directors. A total of 105,369 shares were awarded under the RRP in
October 1999,  and the  grant-date  fair value of these shares  ($961,000) was
charged to  stockholders'  equity.  The awards  vest at a rate of 20% on each of
five  annual  vesting  dates.  Since the RRP was  adopted in the  quarter  ended
December 31, 1999, and the first vesting date was January 1, 2000, a full 20% of
the total equity charge for RRP shares (or $193,000) was expensed in the current
quarter.  The increases in occupancy and equipment  expense and  advertising and
promotion  expense  are  primarily a result of the new  branches  in  Greenwich,
Connecticut and New City, New York. The Greenwich branch was opened in September
1999 and the New City branch was opened in December 1998. In addition, occupancy
and  equipment  in the 1999 quarter  includes  various  expenses  related to the
remodeling of the Harrison and Rye branches.  The increase in other non-interest
expenses was due primarily to additional costs related to operations as a public
company and costs incurred in establishing the new branches.

         For the nine months  ended  December  31,  1999,  non-interest  expense
totaled  $5.3 million as compared to $4.5 million for the same period last year.
This  increase was due  primarily to increases of $434,000 in  compensation  and
benefits,  $356,000 in occupancy  and  equipment,  $266,000 in  advertising  and
promotion,  and $660,000 in other  non-interest  expenses.  These increases were
partially  offset  by  the  absence  of the  $1.0  million  contribution  to the
Foundation made in the 1998 period.  The increases in compensation  and benefits
are primarily due to the RRP expense of $193,000,  described  above,  as well as
staff  additions  and normal  salary  increases.  The increases in occupancy and
equipment expense and advertising and promotion expense are primarily due to the
new branches and the remodeling of existing branches. Other non-interest expense
for the 1999 nine-month period includes $225,000 related to the establishment of
a real estate  investment  trust ("REIT") and operating costs related to the new
branches.

         Income Taxes.  Income tax expense  amounted to $250,000 and $57,000 for
the quarters ended December 31, 1999 and 1998,  respectively.  The effective tax
rate was 35.8% for the quarter ended December 31, 1999.  The Company  reported a
net loss for the same  quarter  in the prior  year.  For the nine  months  ended
December  31,  1999 and 1998,  income  tax  expense  amounted  to  $965,000  and
$960,000,  respectively,  and the  effective  tax rates  were  35.7% and  42.1%,
respectively.  The lower  effective  tax rates in the current  year  reflect the
implementation of the REIT.


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.


                                       13


<PAGE>

         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 4%. At December 31,
1999, the Bank's liquidity ratio under OTS regulations was approximately 30%.

         The primary investing  activities of the Company are the origination of
loans and the  purchase of  securities.  For the  quarter and nine months  ended
December 31, 1999 and for the year ended March 31, 1999, the Company  originated
loans totaling $16.8 million, $46.7 million and $44.2 million, respectively. The
Company purchased securities,  including  mortgage-backed  securities,  totaling
$10.0 million and $29.2  million for the quarter and nine months ended  December
31, 1999, respectively, 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 December 31, 1999, the Company had outstanding  loan  commitments of
$28.9  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,  1999,  totaled  $149.1  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 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 December 31, 1999,  the Bank exceeded all of
the  OTS  minimum  regulatory  capital  requirements,  and was  classified  as a
well-capitalized institution for regulatory purposes.









                                       14


<PAGE>




         The  following  table sets forth the  capital  position  of the Bank as
calculated at December 31, 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 approximately 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)
<S>                                     <C>           <C>         <C>           <C>          <C>        <C>
December 31, 1999
Tangible capital....................  $   45,180       13.9%     $   4,886        1.5%
Tier I (core) capital...............      45,180       13.9         13,029        4.0     $   16,285     5.0%
Risk-based capital:
   Tier I...........................      45,180       34.1                                    7,955     6.0
   Total............................      46,281       34.9         10,607        8.0         13,258    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>



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 December 31, 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  December 31, 1999,  there were no significant
changes in the Company's assessment of market risk.



                                       15
<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

         The Company held a Special Meeting of Stockholders on October 14, 1999.
The purpose of the meeting was to consider  and act upon (i) the approval of the
Sound Federal  Bancorp 1999 Stock Option Plan and (ii) the approval of the Sound
Federal  Bancorp 1999  Recognition  and Retention Plan. The results of the votes
were as follows:


      Proposal 1- Sound Federal Bancorp 1999 Stock Option Plan

     For                        Against                      Abstain
---------------              ------------                  ------------
   3,839,388                    201,671                       20,950




      Proposal 2 - Sound Federal Bancorp 1999 Recognition and Retention Plan

     For                        Against                       Abstain
-------------                 -----------                  -------------
  3,837,921                     203,538                        20,550

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.


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<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
February 11, 2000
























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