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, 2000

                                       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
                      -------------                        August 10, 2000
                      Common Stock,                        ---------------
                     par value, $0.10                       5,005,218


<PAGE>


i

                                TABLE OF CONTENTS


                         PART I -- FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

         Consolidated Balance Sheets at June 30, 2000 and March 31, 2000.......1

         Consolidated Statements of Income for the Three Months
         Ended June 30, 2000 and 1999..........................................2

         Consolidated Statement of Changes in Stockholders' Equity
         for the Three Months Ended June 30, 2000..............................3

         Consolidated Statements of Cash Flows for the Three Months
         Ended June 30, 2000 and 1999..........................................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...........12


                          PART II -- OTHER INFORMATION

Item 1.  Legal Proceedings....................................................13

Item 2.  Changes in Securities and Use of Proceeds............................13

Item 3.  Defaults upon Senior Securities......................................13

Item 4.  Submission of Matters to a Vote of Security Holders..................13

Item 5.  Other Information....................................................13

Item 6.  Exhibits and Reports on Form 8-K.....................................13

         Signatures...........................................................14

<PAGE>





Part 1. - Financial Information

Item 1.  Financial Statements
Sound Federal Bancorp and Subsidiary
<TABLE>
<CAPTION>

CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data)                                            June 30,        March 31,
                                                                                             2000            2000
                                                                                         --------------  -------------
Assets
<S>                                                                                      <C>             <C>
 Cash and due from banks............................................................     $       7,492   $       7,567
 Federal funds sold.................................................................            16,400          25,000
 Certificates of deposit............................................................             7,181          10,075
 Securities:
    Available for sale, at fair value...............................................            60,758          62,365
     Held to maturity, at amortized cost (fair value of $32,892 and $34,799 at
       June 30 and March 31, 2000, respectively)...................................             33,792          35,658
                                                                                          ------------    ------------
          Total securities..........................................................            94,550          98,023
                                                                                          ------------    ------------

 Loans, net:
     Mortgage loans.................................................................           199,030         181,300
     Consumer loans.................................................................               958             820
     Allowance for loan losses (Note 5).............................................            (1,104)         (1,188)
                                                                                          -------------   -------------
          Total loans, net..........................................................           198,884         180,932
                                                                                          ------------    ------------

 Accrued interest receivable........................................................             2,135           2,116
 Federal Home Loan Bank stock.......................................................             2,195           2,195
 Premises and equipment, net........................................................             4,657           4,305
 Deferred income taxes..............................................................             1,630           1,386
 Other assets.......................................................................               869             745
                                                                                           -----------     -----------
           Total assets.............................................................     $     335,993   $     332,344
                                                                                          ============    ============

Liabilities and Stockholders' Equity
  Liabilities:
      Deposits......................................................................     $     280,653   $     275,772
      Mortgagors' escrow funds.....................................................              1,902           2,765
      Accrued expenses and other liabilities........................................               627           1,118
                                                                                          ------------     -----------
         Total liabilities..........................................................           283,182         279,655
                                                                                          ------------     -----------
  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
     Additional paid-in capital.....................................................            22,415          22,415
     Treasury stock, at cost (207,000 shares).......................................            (2,069)         (2,069)
     Common stock held by Employee Stock Ownership Plan ("ESOP") ...................            (1,441)         (1,489)
     Common stock awards under the Recognition and Retention Plan ("RRP").......                  (673)           (721)
     Retained earnings..............................................................            35,674          35,234
     Accumulated other comprehensive loss, net of taxes (Note 5)....................            (1,616)         (1,202)
                                                                                          --------------  -------------
         Total stockholders' equity.................................................            52,811          52,689
                                                                                           ------------    -----------
         Total liabilities and stockholders' equity.................................      $    335,993   $     332,344
                                                                                          ============    ============
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.

Sound Federal Bancorp and Subsidiary

<PAGE>


CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
                                                                         For the Three Months Ended
                                                                                  June 30,
                                                                         ---------------------------
                                                                             2000          1999
                                                                             ----       -------
   Interest and Dividend Income
<S>                                                                      <C>            <C>
    Loans.......................................................         $      3,540   $      2,871
    Mortgage-backed and other securities........................                1,660          1,341
    Federal funds sold and certificates of deposit..............                  477            565
    Other earning assets........................................                   53             45
                                                                            ---------      ---------
    Total interest and dividend income..........................                5,730          4,822
                                                                            ---------      ---------

   Interest Expense
    Deposits....................................................                2,883          2,226
     Other interest-bearing liabilities.........................                   13             11
                                                                            ---------      ---------
    Total interest expense......................................                2,896          2,237
                                                                            ----------     ---------

    Net interest income.........................................                2,834          2,585
    Provision for loan losses (Note 5)..........................                   50             25
                                                                            ---------      ---------
    Net interest income after provision for loan losses.........                2,784          2,560
                                                                            ---------      ---------

   Non-Interest Income
     Service charges and fees...................................                   55             49
     Gain on sale of real estate owned..........................                    -             81
                                                                            ---------      ---------
     Total non-interest income..................................                   55            130
                                                                            ---------      ---------

   Non-Interest Expense
     Compensation and benefits..................................                  899            735
     Occupancy and equipment....................................                  328            193
     Data processing service fees...............................                   96             95
     Advertising and promotion..................................                  168             76
     Other......................................................                  397            506
                                                                            ---------      ---------
     Total non-interest expense.................................                1,888          1,605
                                                                            ---------      ---------

    Income before income tax expense............................                  951          1,085
    Income tax expense..........................................                  356            424
                                                                            ---------      ---------
    Net income..................................................         $        595   $        661
                                                                            =========      =========

    Basic and diluted earnings per common share (Note 4)........         $       0.12   $       0.13
                                                                            =========      =========
</TABLE>




See accompanying notes to the unaudited consolidated financial statements.


<PAGE>





Sound Federal Bancorp and Subsidiary

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Three  Months  Ended June 30, 2000  (Unaudited)  (Dollars in  thousands,
except per share data)


<TABLE>
<CAPTION>

                                                                          Common     Common              Accumulated
                                                   Additional             Stock      Stock                  Other         Total
                                           Common   Paid-In    Treasury  Held By     Awards   Retained  Comprehensive  Stockholders'
                                           Stock    Capital     Stock      ESOP    Under RRP  Earnings       Loss         Equity
                                           -----    -------     -----      ----    ---------  --------       ----         ------
<S>                                       <C>       <C>         <C>      <C>       <C>        <C>        <C>            <C>
Balance at March 31, 2000...............  $  521    $ 22,415    $(2,069) $(1,489)  $   (721)  $ 35,234   $ (1,202)      $   52,689
Net income..............................      --         --         --        --                   595         --              595
Other comprehensive loss (Note 5).......      --         --         --        --         --         --       (414)           (414)
                                                                                                                         ----------
  Total comprehensive income (Note 5)...                                                                                        181
Dividends declared ($0.07 per share)....      --         --          --       --         --       (155)        --              (155)
Vesting of RRP shares...................      --         --          --       --         48         --         --                48
ESOP shares committed to be released
for Balance at June 30, 2000............$    521  $   22,415  $  (2,069)  $(1,441)  $   (673)  $ 35,674   $ (1,616)      $   52,811
                                         =======    ========    ========  ======== ==========  ========  ==========      ==========
</TABLE>



See accompanying notes to the unaudited consolidated financial statements.


<PAGE>


Sound Federal Bancorp and Subsidiary

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
                                                                              For the Three Months Ended
                                                                                       June 30,
                                                                              --------------------------
                                                                                2000             1999
                                                                              -----------   ------------
OPERATING ACTIVITIES
<S>                                                                          <C>               <C>
  Net income............................................................     $    595          $    661
  Adjustments to reconcile net income to net cash provided
      Provision for loan losses.........................................           50                25
      Depreciation expense..............................................          111                49
      ESOP and RRP expense..............................................           96                48
      Deferred income tax expense (benefit).............................           52               (10)
      Gain on sale of real estate owned.................................            -               (81)
      Other adjustments, net............................................         (421)             (141)
                                                                              --------         ---------
            Net cash provided by operating activities...................          483               551
                                                                              ---------        --------

INVESTING ACTIVITIES
   Purchases of securities available for sale...........................            -           (12,430)
  Proceeds from principal payments, maturities and calls of
        securities ....................................................         2,785             4,831
  Disbursements for loan originations...................................      (25,366)          (15,563)
  Principal collection on loans.........................................        7,129             5,971
  Net increase in certificates of deposit...............................        2,894            (1,090)
  Proceeds from sale of real estate owned...............................            -               240
  Purchases of premises and equipment...................................         (463)             (404)
                                                                              --------         ---------
            Net cash used in investing activities.......................      (13,021)          (18,445)
                                                                              --------         ---------

FINANCING ACTIVITIES
  Net increase in deposits..............................................          4,881           3,652
  Net decrease in mortgage escrow deposits..............................           (863)           (781)
  Dividends paid........................................................           (155)           (365)
                                                                              ----------        --------
            Net cash provided by financing activities...................          3,863           2,506
                                                                              ----------        -------

  Decrease in cash and cash equivalents.................................         (8,675)        (15,388)
  Cash and cash equivalents at beginning of period......................         32,567          49,482
                                                                              ---------         -------
  Cash and cash equivalents at end of period............................     $   23,892      $   34,094
                                                                              =========         =======

SUPPLEMENTAL INFORMATION
  Interest paid.........................................................     $    2,878      $    2,237
  Income taxes paid.....................................................            645             465
   Loans transferred to real estate owned...............................            203               -
                                                                             ==========         =======
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.


<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.  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.  After deducting  offering
costs of $1.1  million,  the net cash  proceeds  from the  Offering  were  $20.0
million.


2.   Acquisition

     On  February  16,  2000,  the  Company  entered  into a  definitive  merger
agreement with Peekskill Financial Corporation  ("Peekskill")  providing for the
merger of Peekskill and its wholly-owned subsidiary, First Federal Savings Bank,
with and into the Bank,  with the Bank as the surviving  entity (the  "Merger").
The  Merger  was  consummated  on July  18,  2000.  As part of the  transaction,
Peekskill's  stockholders  received $22 per share in cash. The  transaction  was
valued at approximately  $41.7 million including the  "in-the-money"  portion of
outstanding  stock options.  On a pro-forma  basis using June 30, 2000 data, the
Company  estimates  that its  post-acquisition  total assets and total  deposits
approximate $500 million and $433 million, respectively.

     The Merger is being  accounted for using the purchase method of accounting.
Accordingly,  the assets acquired and liabilities  assumed have been recorded by
the Company at their fair  values at the  consummation  date.  The excess of the
Company's total acquisition cost over the fair value of the net assets acquired,
or "goodwill",  has been recognized as an intangible asset and will be amortized
to  expense  over a period of 15 years.  The  Company's  consolidated  financial
statements  will include  amounts for  Peekskill  for periods  subsequent to the
consummation date.


3.   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, 2001.


<PAGE>

     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 5.

     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, 2000,  included in
the Company's 2000 Annual Report.


4.   Earnings Per Share

     Weighted  average common shares used in calculating  both basic and diluted
earnings per share were  4,787,363 and 5,048,908 for the three months ended June
30,  2000 and  1999,  respectively.  In  computing  basic  earnings  per  share,
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. With respect to
the calculation of diluted  earnings per share,  the application of the treasury
stock method did not result in incremental common equivalent shares or otherwise
have a dilutive  effect on earnings  per share for the  quarters  ended June 30,
2000 and 1999.


5.   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).  Losses are
charged  to the  allowance  when  all or a  portion  of a loan is  deemed  to be
uncollectible.  Recoveries of loans  previously  charged-off are credited to the
allowance for loan losses when realized. Management's periodic 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.







<PAGE>




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

                                         Three Months Ended           Year Ended
                                                June 30,              March 31,
                                    -----------------------------
                                         2000            1999            2000
                                    -------------   -------------     ---------

Balance at beginning of period....  $     1,188     $     1,094     $    1,094
Provision for loan losses.........           50              25            100
Mortgage loans charged off........         (134)             --             (6)
                                      --------------------------    ----------
Balance at end of period..........  $     1,104     $     1,119     $    1,188
                                      =========       =========     ==========



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.



                                                                Other
                               Pre-Tax             Tax       Comprehensive
                                Loss             Effect         Loss
                             -----------       ----------   --------------
Three months ended:                            (in thousands)
   June 30, 2000              $  (725)         $    311     $     (414)
   June 30, 1999                 (873)              355           (518)



     Total  comprehensive  income  (net income  less other  comprehensive  loss)
amounted to $181,000  and  $143,000 for the three months ended June 30, 2000 and
1999, respectively.

     The Company's  accumulated other  comprehensive  loss, which is included in
stockholders'   equity,   represents   the   unrealized   loss   on   securities
available-for-sale  of $2.7  million and $2.1 million at June 30, 2000 and March
31, 2000, respectively,  less related income taxes of $1.1 million and $809,000,
respectively.













<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.

Acquisition

     On  February  16,  2000,  the  Company  entered  into a  definitive  merger
agreement with Peekskill Financial Corporation  ("Peekskill")  providing for the
merger of Peekskill and its wholly-owned subsidiary, First Federal Savings Bank,
with and into the Bank,  with the Bank as the surviving  entity (the  "Merger").
The  Merger  was  consummated  on July  18,  2000.  As part of the  transaction,
Peekskill's  stockholders  received $22 per share in cash. The  transaction  was
valued at approximately $41.7 million,  including the "in-the-money"  portion of
outstanding  stock options.  The  acquisition  is being  accounted for using the
purchase  method of accounting.  On a pro-forma  basis using June 30, 2000 data,
the Company estimates that its post-acquisition  total assets and total deposits
approximate $500 million and $433 million,  respectively. In addition, following
the  Merger,  the Bank's  branch  network  has been  expanded  to include  three
branches in Northern Westchester County, New York.


Financial Condition

     The Company's  total assets  increased by $3.7 million to $336.0 million at
June 30,  2000 from  $332.3  million at March 31,  2000.  The  increase in total
assets reflects an $18.0 million increase in net loans to $198.9 million, funded
principally  by an $8.6  million  decrease  in  Federal  funds,  a $2.9  million
decrease in interest-bearing deposits and a $3.5 million decrease in securities.
Total  deposits  amounted  to $280.7  million at June 30,  2000,  as compared to
$275.8 million at March 31, 2000. Total stockholders'  equity increased $122,000
to $52.8  million at June 30,  2000 as  compared  to $52.7  million at March 31,
2000.


<PAGE>


Results of Operations

     General. Net income amounted to $595,000 or $0.12 per share for the quarter
ended June 30, 2000,  as compared to $661,000 or $0.13 per share for the quarter
ended June 30, 1999. The decrease in net income for the current  quarter was due
primarily to a $283,000 increase in non-interest expenses and a $75,000 decrease
in non-interest income,  partially offset by a $249,000 increase in net interest
income and a $68,000 decrease in income tax expense.

     Net Interest  Income.  Net interest  income for the quarter  ended June 30,
2000 amounted to $2.8 million,  a $249,000  increase from the same period in the
prior year.  The interest rate spread was 3.00% and 3.01% for the quarters ended
June 30, 2000 and 1999, respectively.  The net interest margin for those periods
was 3.53% and 3.61%,  respectively.  The  relatively  flat  interest rate spread
reflects the increase in interest rates during the past year, and changes in the
asset and  deposit mix of the Bank.  The yield on earning  assets  increased  41
basis  points to 7.15% for the  quarter  ended June 30,  2000 as compared to the
same quarter in 1999, as rising interest rates caused the Bank's adjustable rate
securities  to  reprice.  In  addition,  the  reallocation  of  funds  from  the
securities  portfolios and short-term  investments into loans (which have higher
yields) caused the yield on interest-earning assets to increase. However, rising
market interest rates caused the cost of deposits to increase 42 basis points to
4.15%. In addition, time deposits, which have a higher cost than other deposits,
represented  61.2%  of  average  interest-bearing  liabilities  for the  current
quarter as compared to 57.1% for the prior year quarter.

     Interest  Income.  Interest  income totaled $5.7 million during the quarter
ended June 30, 2000 as compared to $4.8 million for the same period in the prior
year.   This   increase  is  due  to  a  $34.7   million   increase  in  average
interest-earning assets to $321.7 million during the quarter ended June 30, 2000
as compared to $287.0  million for the same quarter in the prior year,  and by a
41 basis  point  increase  in the average  yield on  interest-earning  assets to
7.15%.  The increase in the average balance of  interest-earning  assets was due
primarily to the investment of funds from deposit growth during the past year.

     Loans. Interest income on loans increased $669,000 or 23.3% to $3.5 million
for the  current  quarter as compared  to $2.9  million for the same  quarter in
1999. This increase is due to a $40.9 million increase in the average balance of
loans to $188.9  million  partially  offset by a 26 basis point  decrease in the
yield  earned to 7.52%.  The  growth  of the loan  portfolio  is a result of the
Company's  efforts to expand its loan products  offered and markets  served,  as
well as the strong demand for fixed rate loans (the Company's  primary  mortgage
loan product). Comparatively 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 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 portfolio as a whole.

     Mortgage-Backed   Securities.   Interest  on   mortgage-backed   securities
increased  $60,000 to $911,000 for the quarter ended June 30, 2000 due primarily
to an  increase  of 57 basis  points in the  average  yield to 6.48%,  partially
offset by a $1.3 million decrease in the average balance to $56.4 million.  Many
of these mortgage-backed  securities have rates that adjust annually,  typically
based on Treasury bill rates.  As interest rates  increased over the last twelve
months, these securities began to reprice to higher interest rates. The decrease
in the average  balance  reflects  the use of principal  repayments  to fund the
growth  of the  loan  portfolio  and  the  purchase  of  securities  other  than
mortgage-backed securities.

     Other  Securities.  Interest  on other  securities  increased  $259,000  to
$749,000 for the quarter  ended June 30, 2000 as compared to the same quarter in
1999 due to a $10.1 million increase in the average balance to $42.3 million and
a 99 basis point increase in the average yield earned to 7.11%.  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. The increase in the average yield reflects higher
market interest rates.

     Federal  Funds.  Interest on Federal funds  decreased  $48,000 to $359,000,
reflecting  a $12.5  million  decrease in the average  balance to $21.7  million
partially  offset by a 187 basis point  increase in the average


<PAGE>

yield  earned to 6.64%.  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 $118,000 for the quarter ended June 30,
2000 as  compared  to  $158,000  for the same  quarter in the prior  year.  This
decrease reflects a $2.9 million decrease in the average balance to $8.5 million
for the 2000 quarter as compared to $11.4 million for the same quarter in 1999.

     Interest  Expense.  Interest  expense for the  quarter  ended June 30, 2000
totaled $2.9 million, as compared to $2.2 million for the quarter ended June 30,
1999.  The  average  balance of  interest-bearing  liabilities  increased  $39.3
million  to $279.8  million  for the  quarter  ended June 30,  2000 from  $240.5
million  for the same  quarter in the prior year and the  average  cost of these
liabilities  increased  42 basis  points to 4.15%.  The  increase in the average
balance is due primarily to a $33.8 million  increase in the average  balance of
time  deposits to $171.1  million  from $137.3  million in the same quarter last
year. This growth in time deposits reflects marketing campaigns to celebrate the
opening of the Bank's  Greenwich  branch in September 1999.  Interest expense on
time deposits  totaled $2.3 million for the current  quarter as compared to $1.7
million for the same quarter in 1999. The increase is due to the increase in the
average  balance of time  deposits as well as a 55 basis  point  increase in the
average rate paid to 5.48%.

     Interest expense on other deposits (savings, NOW and money market accounts)
amounted to $547,000 for the quarter ended June 30, 2000 as compared to $539,000
for the same quarter in the prior year.  The average  balance of these  accounts
increased  $5.0 million to $106.6  million and the average rate paid decreased 7
basis points to 2.06%

     Provision  for Loan Losses.  The  provision for loan losses was $50,000 for
the quarter  ended June 30,  2000 as  compared to $25,000 for the quarter  ended
June 30, 1999. Non-performing loans amounted to $806,000 or 0.40% of total loans
at June 30,  2000,  as  compared to $817,000 or 0.53% of total loans at June 30,
1999.  The allowance  for loan losses  amounted to $1.1 million at June 30, 2000
and 1999, respectively. Charge-offs amounted to $134,000 during the three months
ended June 30, 2000 (none for the three months ended June 30, 1999).

     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 $55,000 and $130,000 for
the quarters ended June 30, 2000 and 1999, respectively.  The quarter ended June
30,  1999  included  a net gain of  $81,000  on the sale of real  estate  owned.
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 $1.9 million for the
quarter  ended June 30, 2000 as compared to $1.6  million for the quarter  ended
June 30,  1999.  This  increase is due  primarily  to  increases  of $164,000 in
compensation and benefits, $135,000 in occupancy and equipment costs and $92,000
in advertising and promotion,  partially offset by a $109,000  decrease in other
non-interest  expenses.  The  increase  in  compensation  and  benefits  is  due
primarily to staff hired for the Greenwich branch, expense of $47,000 related to
the  Recognition  and Retention  Plan  established  in October 1999,  and normal
salary increases. The increase in occupancy and equipment costs includes various
expenses  related to the remodeling of the Harrison and Rye branches and the new
branch in Greenwich,  Connecticut.  The increase in advertising and promotion is
primarily  due to  promotional  events for the grand  opening  of the  Greenwich
branch and the re-opening of the remodeled branches.


<PAGE>

     Income Taxes.  Income tax expense amounted to $356,000 and $424,000 for the
quarters ended June 30, 2000 and 1999, respectively.  The effective tax rate for
those same periods was 37.4% and 39.1%, 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 4%. At June 30, 2000, the Bank's
liquidity ratio under OTS regulations was approximately 25%.

     The primary  investing  activities  of the Company are the  origination  of
loans and the purchase of  securities.  For the three months ended June 30, 2000
and for the year ended March 31, 2000,  the Company  originated  loans  totaling
$24.8 million and $62.5 million,  respectively. The Company did not purchase any
securities  during the quarter ended June 30, 2000 in  anticipation of liquidity
needed  to  fund  the  Acquisition.  The  Company  purchased  $35.2  million  of
securities for the year ended March 31, 2000.

     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, 2000,  the Company had  outstanding  loan  commitments of $34.5
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, 2000, totaled $157.6 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 regulations. At June 30, 2000, the Bank exceeded all
of the OTS minimum  regulatory  capital  requirements,  and was  classified as a
well-capitalized institution for regulatory purposes.


<PAGE>

     The following table sets forth the historical  capital position of the Bank
as  calculated  at June 30, 2000 prior to the Merger.  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)
June 30, 2000
<S>                                   <C>              <C>       <C>              <C>     <C>           <C>
Tangible capital....................  $   46,372       13.7%     $   5,071        1.5%
Tier I (core) capital...............      46,372       13.7         13,522        4.0     $   16,903     5.0%
Risk-based capital:
   Tier I...........................      46,372       31.1                                    8,938     6.0
   Total............................      47,476       31.9         11,918        8.0         14,898    10.0

Tangible capital....................  $   45,786       13.7%     $   5,007        1.5%
Tier I (core) capital...............      45,786       13.7         13,353        4.0     $   16,690     5.0%
Risk-based capital:
   Tier I...........................      45,786       32.9                                    8,352     6.0
   Total............................      46,909       33.7         11,136        8.0         13,920    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 June 30, 2000, 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, 2000,  there were no significant  changes
in the Company's assessment of market risk.



<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.


<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 11, 2000