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 September 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
                                                   Outstanding at
               Class                              November 10, 2000
            -------------                        -----------------
           par value, $0.10                          4,993,218







<PAGE>



                                TABLE OF CONTENTS


                         PART I -- FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

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

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

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

Consolidated Statements of Cash Flows for the Six Months
Ended September 30, 2000 and 1999..............................................4

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


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

CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                        September 30,             March 31,
                                                                                            2000                    2000
                                                                                    --------------------        ------------

Assets
<S>                                                                                 <C>                     <C>
 Cash and due from banks........................................................    $          11,489       $           7,567
 Federal funds sold.............................................................               17,500                  25,000
 Certificates of deposit........................................................                5,581                  10,075
 Securities:
    Available for sale, at fair value...........................................              153,732                  62,365
    Held to maturity, at amortized cost (fair value of $31,877 and
    $34,799 at September 30, 2000 and March 31, 2000, respectively).............               32,008                  35,658
                                                                                          -----------            ------------
          Total securities......................................................              185,740                  98,023
                                                                                         ------------            ------------
 Loans, net:
     Mortgage loans.............................................................              275,767                 181,300
     Consumer loans.............................................................                1,316                     820
     Allowance for loan losses (Note 5).........................................               (1,946)                 (1,188)
                                                                                         -------------           -------------
          Total loans, net......................................................              275,137                 180,932
                                                                                         ------------            ------------

 Accrued interest receivable....................................................                3,172                   2,116
 Federal Home Loan Bank stock...................................................                3,745                   2,195
 Premises and equipment, net....................................................                6,047                   4,305
 Deferred income taxes..........................................................                2,061                   1,386
 Goodwill (Note 2)..............................................................               14,976                       -
 Other assets...................................................................                2,012                     745
                                                                                          -----------             -----------
           Total assets.........................................................    $         527,460       $         332,344
                                                                                         ============            ============

Liabilities and Stockholders' Equity
  Liabilities:
      Deposits..................................................................    $         448,223       $         275,772
       Borrowings...............................................................               19,539                      86
       Mortgagors' escrow funds.................................................                2,730                   2,765
       Accrued expenses and other liabilities...................................                1,852                   1,032
                                                                                         ------------             -----------
       Total liabilities                                                                      472,344                 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 issued)...................................................                  521                     521
     Additional paid-in capital.................................................               22,407                  22,415
     Treasury stock, at cost (219,000 shares at September 30, 2000
        and 207,000 shares at March 31,2000)....................................               (2,178)                 (2,069)
     Common stock held by Employee Stock Ownership Plan ("ESOP")................               (1,393)                 (1,489)
     Common stock awards under the Recognition and Retention Plan ("RRP").......                 (624)                   (721)
     Retained earnings .........................................................               36,186                  35,234
     Accumulated other comprehensive income (loss), net of taxes (Note 5).......                  197                  (1,202)
                                                                                                  ---                  -------
     Total stockholders' equity                                                                55,116                  52,689
                                                                                               ------                 ------
     Total liabilities and stockholders' equity                                      $        527,460       $         332,344
                                                                                              =======                 =======
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.




                                        1

<PAGE>




Sound Federal Bancorp and Subsidiary

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

<TABLE>
<CAPTION>
                                                                   For the Three Months Ended         For the Six Months Ended
                                                                         September 30,                      September 30,
                                                                  -------------------------         --------------------------

                                                                       2000          1999              2000            1999
                                                                       ----          ----              ----            ----
Interest and Dividend Income
<S>                                                              <C>             <C>               <C>            <C>
 Loans.......................................................    $     5,016     $     2,961       $    8,556     $      5,832

 Securities..................................................          3,156           1,419            4,815            2,760
 Federal funds sold and certificates of deposit..............            292             513              769            1,078



 Other earning assets........................................            146              47              200               92
                                                                   ---------       ---------        ---------        ---------
 Total interest and dividend income..........................          8,610           4,940           14,340            9,762
                                                                   ---------       ---------        ---------        ---------


Interest Expense
 Deposits....................................................          4,449           2,322            7,333            4,548
 Borrowings..................................................            335               2              337                 4
 Other interest-bearing liabilities..........................             24              11               35                20
                                                                          --              --               --               --
 Total interest expense......................................          4,808           2,335             7,705            4,572
                                                                   ---------       ---------        ---------        ---------

 Net interest income.........................................          3,802           2,605            6,635            5,190
 Provision for loan losses (Note 5)..........................             58              25              108               50
                                                                   ---------       ---------        ---------        ---------
 Net interest income after provision for loan losses.........          3,744           2,580            6,527            5,140
                                                                   ---------       ---------        ---------        ---------

Non-Interest Income
  Service charges and fees...................................             88              51              143              100
  Gain (loss) on sale of real estate owned...................            (22)             --              (22)              81
                                                                   ----------      ---------        ----------       ---------
  Total non-interest income..................................             66              51              121              181
                                                                   ---------       ---------        ---------        ---------

Non-Interest Expense
  Compensation and benefits..................................          1,188             796            2,088            1,531
  Occupancy and equipment....................................            379             235              707              428
  Data processing service fees                                            71              60              167              155

  Advertising and promotion..................................            132             120              300              196
  Goodwill amortization (Note 2).............................            255               -              255                -
  Other......................................................            525             502              921            1,008
                                                                   ---------       ---------        ---------        ---------
  Total non-interest expense.................................          2,550           1,713            4,438            3,318
                                                                   ---------       ---------        ---------        ---------

 Income before income tax expense............................          1,260             918            2,210            2,003
 Income tax expense..........................................            590             291              946              715
                                                                   ---------       ---------        ---------        ---------
 Net income..................................................   $        670    $        627     $      1,264     $      1,288
                                                                   =========       =========        =========        =========

    Basic and diluted earnings per common share (Note 4)        $       0.14    $       0.13     $       0.26     $       0.26
                                                                   =========       =========        =========        =========
</TABLE>


See accompanying notes to the unaudited consolidated financial statements.



                                       2
<PAGE>






Sound Federal Bancorp and Subsidiary

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Six Months Ended September 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  Income (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................................     --         --         --        --                 1,264           --        1,264
Other comprehensive income (Note 5).......     --         --         --        --        --          --        1,399        1,399
                                                                                                                          -------
  Total comprehensive income (Note 5).....                                                                                  2,663
Repurchase of common stock................      -          -        (109)       -         -           -            -        (109)
Dividends declared ($0.14 per share)......     --         --          --       --        --        (312)          --        (312)
Vesting of RRP shares.....................     --         --          --        --       97          --           --          97
ESOP shares committed to be released for
   allocation.............................     --         (8)         --        96       --          --           --          88
                                           ------- ---------------------   -------  ----------  --------  ----------       ------

Balance at September 30, 2000............. $  521  $   22,407    $(2,178)  $(1,393) $    (624)  $36,186   $      197    $  55,116
                                           ======    ========    ========  ======== ==========  =======   ==========      =======
</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 Six Months Ended
                                                                                           September 30,
                                                                                  ---------------------------------
                                                                                      2000                  1999
OPERATING ACTIVITIES                                                              ----------             ----------
<S>                                                                               <C>                    <C>
  Net income............................................................          $    1,264             $    1,288
  Adjustments to reconcile net income to net cash provided
      by operating activities:
      Provision for loan losses.........................................                 108                     50
      Depreciation and amortization....................................                  207                    103
      ESOP and RRP expense.............................................                  185                     97
      Deferred income tax benefit......................................                   (2)                   (34)
      Goodwill amortization............................................                  255                      -
      Loss (gain) on sale of real estate owned.........................                   22                    (81)
      Other adjustments, net...........................................                  215                     75
                                                                                  ----------             ----------
            Net cash provided by operating activities.........                         2,254                  1,498
                                                                                  ----------             ----------


INVESTING ACTIVITIES
   Purchases of securities available for sale...........................                   -                (19,243)
  Proceeds from the sale of securities available for sale...............              21,888                      -
  Proceeds from principal payments, maturities and calls of securities                11,669                  8,720
  Disbursements for loan originations...................................             (42,769)               (29,939)
  Principal collection on loans.........................................              15,737                 10,718
  Net decrease (increase) in certificates of deposit....................               4,494                 (1,392)
  Cash paid in purchase acquisition, net of cash acquired..............              (33,937)                     -
  Proceeds from sale of real estate owned...............................                  33                    314
  Purchases of premises and equipment...................................                (568)                (1,167)
                                                                                  ----------             ----------
            Net cash used in investing activities.......................             (23,453)               (31,989)
                                                                                  ----------             ----------


FINANCING ACTIVITIES
  Net increase in deposits                                                              20,090               18,526
  Net decrease in mortgagors' escrow funds                                              (2,048)                (942)
  Purchase of treasury stock                                                              (109)              (1,393)
  Dividends paid                                                                          (312)                (706)
            Net cash provided by financing activities                                   17,621               15,485

  Decrease in cash and cash equivalents                                                 (3,578)             (15,006)
  Cash and cash equivalents at beginning of period                                      32,567               49,482
  Cash and cash equivalents at end of period                                      $     28,989       $       34,476

SUPPLEMENTAL INFORMATION
  Interest paid                                                                   $      7,879       $        4,448

SUPPLEMENTAL INFORMATION
  Interest paid.........................................................          $      7,879       $       4,448
  Income taxes paid.....................................................                   708                 773
   Loans transferred to real estate owned...............................                   291                 124
                                                                                  ============         ===========
   Acquisition accounted for by the purchase method:
      Fair value of assets acquired, including goodwill of $15,231......          $    212,850       $          -
      Fair value of liabilities assumed.................................              (174,081)                 -
                                                                                  ------------       ------------
      Cash paid in acquisition..........................................          $     38,769       $          -
                                                                                  ============       ============
</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
"Acquisition"). The Acquisition 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.  At  the  time  of the
Acquisition,  Peekskill had total assets of $201.5 million and total deposits of
$152.4  million   (historical   carrying  amounts  before  purchase   accounting
adjustments).

     The  Acquisition  has been  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
is being amortized to expense over a period of 15 years. Goodwill resulting from
the Acquisition totaled $15.2 million and the related  amortization was $255,000
for the quarter  ended  September  30,  2000.  Financial  statement  amounts for
Peekskill  and  its  subsidiary  are  included  in  the  Company's  consolidated
financial statements beginning on the acquisition 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

                                        5


<PAGE>



disclosures  are  adequate to make the  information  presented  not  misleading;
however,  the operating  results for the periods  presented are not  necessarily
indicative  of results to be expected  for any other  interim  period or for the
entire fiscal year ending March 31, 2001.

     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  4,793,260  and  4,967,074  for the three  months ended
September 30, 2000 and 1999,  respectively.  For the six months ended  September
30, 2000 and 1999,  weighted average common shares used in calculating basic and
diluted  earnings  per share were  4,795,336  and  5,031,204,  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 three months and six months ended September 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.













                                        6

<PAGE>




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


<TABLE>
<CAPTION>
                                            Three Months Ended               Six Months Ended         Year Ended
                                                 September 30,                   September 30,         March 31,
                                       ------------------------------  ---------------------------     ---------
                                            2000            1999            2000           1999          2000
                                       -------------   -------------   -------------  ------------       ----
                                                               (in thousands)
<S>                                    <C>             <C>             <C>            <C>             <C>
Balance at beginning of period....     $     1,104     $     1,119     $     1,188    $     1,094     $     1,094
Provision for loan losses.........              58              25             108             50             100
Allowance transferred in Acquisition           784             -               784            -                 -
Mortgage loans charged off........              --             -              (134)           -                (6)
                                         ----------      ----------      ----------     ----------     -----------
Balance at end of period..........     $     1,946     $     1,144     $     1,946    $     1,144           1,188
                                         =========       =========       =========      =========      ===========
</TABLE>



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
                              Income (Loss)               Effect             Income (Loss)
                           ---------------        -----------------       ----------------
Three Months Ended:                                   (in thousands)
<S>                        <C>                    <C>                     <C>
   September 30, 2000      $       3,070          $      (1,257)          $       1,813
   September 30, 1999               (404)                   168                    (236)

Six Months Ended:
   September 30, 2000              2,345                   (946)                  1,399
   September 30, 1999             (1,277)                   523                    (754)
</TABLE>



     Total comprehensive  income (net income and other  comprehensive  income or
loss) amounted to $2.5 million and $391,000 for the three months ended September
30,  2000 and 1999,  respectively,  and $2.7  million and  $534,000  for the six
months ended September 30, 2000 and 1999, respectively.

     The Company's  accumulated  other  comprehensive  income  (loss),  which is
included in  stockholders'  equity,  represents  the  unrealized  gain (loss) on
securities available for sale of $334,000 and $2.0 million at September 30, 2000
and March 31,  2000,  respectively,  less  related  income taxes of $137,000 and
$809,000, 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.

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
"Acquisition").  The  Acquisition  was  consummated on July 18, 2000. As further
described in Note 2 to the unaudited  consolidated  financial statements in Item
1, the  acquisition  has  been  accounted  for  using  the  purchase  method  of
accounting and,  accordingly,  financial statement amounts for Peekskill and its
subsidiary  are  included in the  Company's  consolidated  financial  statements
beginning on the acquisition date.


Financial Condition

     The Company's total assets increased by $195.1 million to $527.5 million at
September 30, 2000 from $332.3  million at March 31, 2000,  primarily due to the
Acquisition.  At the time of the  Acquisition,  Peekskill  had  total  assets of
$201.5 million.  The increase in total assets includes an $87.7 million increase
in securities to $185.7 million, a $94.2 million increase in net loans to $275.1
million  and a $15.0  million  increase  in  goodwill  which  resulted  from the
Acquisition. Total deposits amounted to $448.2 million at September 30, 2000, an
increase of $172.4 million  compared to $275.8 million at March 31, 2000. At the
time of the Acquisition, Peekskill had total deposits of $152.4 million. Total


                                       8

<PAGE>




stockholders'  equity  increased  $2.4 million to $55.1 million at September 30,
2000, as compared to $52.7 million at March 31, 2000.


Results of Operations

     General.  Net income amounted to $670,000 or $0.14 per common share for the
quarter  ended  September  30, 2000, as compared to $627,000 or $0.13 per common
share for the quarter ended  September 30, 1999.  The increase in net income for
the current quarter was due primarily to a $1.2 million increase in net interest
income,  substantially  offset by an $837,000 increase in non-interest  expenses
and a $299,000 decrease in income tax expense.

     For both  six-month  periods ended  September 30, 2000 and 1999, net income
amounted  to $1.3  million  or $0.26  per  common  share.  Net  interest  income
increased  $1.4 million for the six months ended  September 30, 2000 as compared
to the same period in 1999,  offset by a $1.1 million  increase in  non-interest
expenses and a $231,000 increase in income tax expense.

     Net Interest  Income.  Net interest  income for the quarter ended September
30, 2000 amounted to $3.8 million,  a $1.2 million increase from the same period
in the prior year. The interest rate spread was 3.00% and 2.97% for the quarters
ended  September 30, 2000 and 1999,  respectively.  The net interest  margin for
those  periods  was 3.39% and  3.54%,  respectively.  For the six  months  ended
September 30, 2000, net interest  income amounted to $6.6 million as compared to
$5.2 million for the prior year. The interest rate spread for those same periods
was 3.00% and 2.99%, respectively. The net interest margin was 3.35% for the six
months  ended  September  30,  2000 as  compared to 3.57% for the same period in
1999.

     Interest  Income.  Interest  income totaled $8.6 million during the quarter
ended  September 30, 2000 as compared to $4.9 million for the same period in the
prior  year.  This  increase  is due to a $157.8  million  increase  in  average
interest-earning assets to $450.2 million during the quarter ended September 30,
2000 as compared to $292.4  million for the same quarter in the prior year,  and
by an 89 basis point increase in the average yield on interest-earning assets to
7.59%.  The increase in the average balance of  interest-earning  assets was due
primarily  to the  Acquisition.  The  increase in the average  yield earned is a
result of the assets acquired,  as well as an overall increase in interest rates
during the first half of calendar 2000.  For the six months ended  September 30,
2000,  interest income totaled $14.3 million as compared to $9.8 million for the
same period in the prior year. This increase is due to a $104.8 million increase
in the average  balance of  interest-earning  assets to $394.8  million and a 54
basis point increase in the yield earned to 7.25%.

     Loans.  Interest  income on loans  increased  $2.0 million or 69.4% to $5.0
million for the current quarter as compared to $3.0 million for the same quarter
in 1999. This increase is due to a $97.5 million increase in the average balance
of loans to $255.1  million and a 35 basis point increase in the yield earned to
7.80%.  For the six months ended  September 30, 2000,  interest  income on loans
increased  $2.7 million or 46.7% to $8.6 million as compared to $5.8 million for
the same period in 1999. This increase is due to a $72.6 million increase in the
average balance of loans to $225.3 million,  partially offset by a 4 basis point
decrease in the yield earned to 7.58%.

     The growth of the loan portfolio is principally a result of the Acquisition
(Peekskill had net loans of $67.3 million at the  acquisition  date), as well as
efforts by the Company to expand its loan  products  offered and markets  served
and 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.

     Mortgage-Backed   Securities.   Interest  on   mortgage-backed   securities
increased $1.5 million to $2.3 million for the quarter ended  September 30, 2000
due  primarily  to an  increase  of $68.5  million  in the  average  balance  of
mortgage-backed securities to $124.1 million and an increase of 167 basis


                                       9

<PAGE>



points in the average  yield to 7.32%.  Interest on  mortgage-backed  securities
increased  $1.6 million to $3.2 million for the six months ended  September  30,
2000 due  primarily  to an increase of $38.7  million in the average  balance of
mortgage-backed  securities  to $95.3 million and an increase of 91 basis points
in the average yield to 6.70%.  The higher average  balances in the current year
reflect securities acquired in the Acquisition.

     Other  Securities.  Interest  on other  securities  increased  $238,000  to
$865,000  for the  quarter  ended  September  30,  2000 as  compared to the same
quarter in 1999 due to a $5.0 million  increase in the average  balance of other
securities to $43.6 million and a 142 basis point  increase in the average yield
earned to 7.87%. Interest on other securities increased $497,000 to $1.6 million
for the six months ended  September 30, 2000 as compared to the six months ended
September  30, 1999 due to a $7.6  million  increase  in the average  balance of
other  securities to $43.0 million and a 119 basis point increase in the average
yield earned to 7.49%.  The higher average  balances in the current year reflect
securities  acquired  in the  Acquisition,  net of  sales  of  certain  acquired
securities which were made in order to fund a portion of the Acquisition cost.

     Federal Funds. Interest on Federal funds decreased $120,000 to $229,000 for
the quarter ended September 30, 2000 as compared to $349,000 for the same period
in 1999.  This  decrease  is due to an $11.8  million  decrease  in the  average
balance to $14.6 million,  partially  offset by a 98 basis point increase in the
average  yield  earned to 6.23%.  For the six months ended  September  30, 1999,
interest on Federal funds decreased $169,000 to $587,000 as compared to the same
period in 1999,  reflecting a $12.2 million  decrease in the average  balance to
$18.4  million,  partially  offset by a 145 basis point  increase in the average
yield  earned to 6.37%.  The lower level of Federal  funds in the  current  year
reflects the  utilization  of certain of the  Company's  liquid assets to fund a
portion of the Acquisition cost.

     Interest Expense. Interest expense for the quarter ended September 30, 2000
totaled  $4.8  million,  as  compared  to $2.3  million  for the  quarter  ended
September  30,  1999.  The  average  balance  of  interest-bearing   liabilities
increased  $172.4 million to $420.3 million for the quarter ended  September 30,
2000 from $247.9  million for the same quarter in the prior year and the average
cost of these liabilities increased 85 basis points to 4.59%. For the six months
ended September 30, 2000,  interest expense totaled $7.7 million, as compared to
$4.6 million for the six months ended September 30, 1999. The average balance of
interest-bearing  liabilities increased $115.1 million to $359.7 million for the
six months ended  September  30, 2000 from $244.6  million in the prior year and
the average cost of these  liabilities  increased 54 basis points to 4.27%.  The
increase in interest-bearing liabilities is due primarily to the Acquisition.

     Interest  expense on time  deposits  totaled  $3.6  million for the current
quarter as compared to $1.8 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 91
basis point increase in the average cost to 5.82%.  Interest on savings accounts
amounted to $617,000  for the  current  quarter as compared to $318,000  for the
quarter ended June 30, 1999. The average balance of savings  accounts  increased
$39.1 million to $99.4 million and the average cost increased 37 basis points to
2.46%.  Interest  expense  on other  deposits  (NOW and money  market  accounts)
amounted  to  $245,000  for  quarter  ended  September  30,  2000 as compared to
$237,000  for the same quarter in the prior year.  The average  balance of these
accounts increased $13.9 million to $56.5 million and the average cost decreased
49 basis points to 1.72%.

     For the quarter ended September 30, 2000,  interest on borrowings  amounted
to $335,000 as  compared  to $2,000 in the prior  year.  The average  balance of
borrowings for the quarter was $15.9 million and the average rate paid was 8.39%
as compared to $86,000 and 9.29%,  respectively,  for the same  quarter in 1999.
The increase in  borrowings  consists of FHLB  advances that were a component of
Peekskill's capital management strategy and were assumed in the Acquisition.

     Interest  expense on time deposits  totaled $5.9 million for the six months
ended  September  30, 2000 as  compared  to $3.5  million for the same period in
1999. The increase is due to a $72.5 million  increase in the average balance of
time  deposits  and a 64 basis  point  increase  in the  average  cost to 5.56%.
Interest on savings  accounts  amounted to  $950,000  for the current  period as
compared to


                                       10

<PAGE>




$621,000 for the six months ended June 30, 1999. The average  balance of savings
accounts increased $22.7 million to $82.9 million and the average cost increased
23 basis  points to 2.29%.  Interest  expense on other  deposits  (NOW and money
market  accounts)  amounted to $458,000 for the six months ended  September  30,
2000 as compared to $471,000 for the same period in the prior year.  The average
balance  of these  accounts  increased  $9.6  million to $52.0  million  and the
average cost increased 46 basis points to 1.76%.

     For the six  months  ended  September  30,  2000,  interest  on  borrowings
amounted  to  $337,000  as  compared  to $4,000 in the prior  year.  The average
balance of  borrowings  for the six months  ended  September  30,  2000 was $9.1
million as compared to $86,000  for the same  period in 1999.  The average  rate
paid was 8.05% and 9.30% for those same respective periods.


     Provision  for Loan Losses.  The  provision for loan losses was $58,000 for
the  quarter  ended  September  30,  2000 as compared to $25,000 for the quarter
ended  September  30, 1999.  For the six months ended  September  30, 2000,  the
provision  for loan  losses was  $108,000  as  compared  to $50,000 for the same
period in the prior year. Non-performing loans amounted to $1.3 million or 0.43%
of total loans at September  30, 2000, as compared to $759,000 or 0.46% of total
loans at September  30, 1999.  The  allowance  for loan losses  amounted to $1.9
million and $1.2 million at September 30, 2000 and March 31, 2000, respectively.
The  increase  in the  allowance  for loan  losses is  primarily a result of the
Acquisition.  There  were no  charge-offs  in the 2000  quarter as  compared  to
charge-offs  of $6,000 in the quarter  ended  September  30,  1999.  Charge-offs
amounted to $134,000 for the six months ended  September 30, 2000 as compared to
$6,000 for the six months ended September 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 $66,000 and $51,000 for
the quarters ended September 30, 2000 and 1999, respectively. For the six months
ended September 30, 2000 and 1999,  non-interest income amounted to $121,000 and
$181,000,  respectively.  Non-interest  income  consists  principally of service
charges on deposit  accounts,  late charges on loans and various  other  service
fees.  Service  fees  amounted to $88,000 and  $51,000  for the  quarters  ended
September 30, 2000 and 1999,  respectively.  For the six months ended  September
30, 2000 and 1999, service fees amounted to $143,000 and $100,000, respectively.
The increases in service fees are primarily attributable to the Acquisition. The
quarter and six months ended  September  30, 2000  included a loss of $22,000 on
the sale of real estate owned.  The six months ended September 30, 1999 included
an $81,000 gain on the sale of real estate owned.

     Non-Interest  Expense.  Non-interest  expense  totaled $2.6 million for the
quarter  ended  September  30, 2000 as compared to $1.7  million for the quarter
ended  September  30,  1999.  This  increase is due  primarily  to  increases of
$392,000 in  compensation  and  benefits,  $144,000 in occupancy  and  equipment
costs, $12,000 in advertising and promotion,  $255,000 in goodwill  amortization
and $23,000 in other non-interest expenses.

     For the six months ended September 30, 2000,  non-interest  expense totaled
$4.5  million as  compared to $3.3  million  for the same  period in 1999.  This
increase is due primarily to increases of $557,000 in compensation and benefits,
$279,000 in occupancy and equipment costs, $104,000 in advertising and promotion
and $255,000 in goodwill  amortization,  partially offset by an $87,000 decrease
in other non-interest expenses.

                                       11


<PAGE>




     The increases in non-interest expenses are due primarily to the Acquisition
and the opening of the Bank's Cos Cob branch in September 1999.

     Income Taxes.  Income tax expense amounted to $590,000 and $291,000 for the
quarters ended September 30, 2000 and 1999, respectively. The effective tax rate
for those same  periods  was 46.8% and 31.7%,  respectively.  For the six months
ended September 30, 2000 and 1999,  income tax expense  amounted to $946,000 and
$715,000,  respectively. The effective tax rate for those same periods was 42.8%
and 35.7%, respectively.  The higher effective tax rates in the current year are
primarily due to the  amortization  of goodwill  which is not deductible for tax
purposes.


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 September 30, 2000,  the
Bank's liquidity ratio under OTS regulations was approximately 16.8%.

     The primary  investing  activities  of the Company are the  origination  of
loans and the purchase of securities.  For the three months ended  September 30,
2000 and for the year  ended  March  31,  2000,  the  Company  originated  loans
totaling  $42.5  million and $62.5  million,  respectively.  The Company did not
purchase any  securities  during the quarter and six months ended  September 30,
2000, other than securities  acquired in the Acquisition.  The Company purchased
$35.2  million of  securities  during the year ended March 31,  2000,  including
$19.2 million during the six months ended September 30, 1999. During the quarter
ended September 30, 2000, the Company sold $21.9 million of securities available
for sale. These securities were part of Peekskill's  portfolio and were recorded
by the Company at their fair value in  accordance  with the  purchase  method of
accounting.  The securities were sold by the Company immediately thereafter and,
as a result of the fair value adjustment, there was no gain or loss on the sale.

     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 September 30, 2000,  the Company had  outstanding  loan  commitments  of
$40.4  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  September  30, 2000,  totaled  $243.8  million.
Management believes that a significant portion of such deposits will remain with
the Company.

     The Bank is subject to certain  minimum  leverage,  tangible and risk-based
capital  requirements  established by regulations of the OTS. These  regulations
require savings associations to meet three minimum capital standards: a tangible
capital  ratio  requirement  of 1.5% of total  assets as adjusted  under the OTS
regulations;  a  leverage  ratio  requirement  of 4.0% of core  capital  to such
adjusted  total assets;  and a risk-based  capital ratio  requirement of 8.0% of
core and  supplementary  capital  to total  risk-based  assets.  The OTS  prompt
corrective  action  regulations  impose  a 4.0%  core  capital  requirement  for
categorization  as an  "adequately  capitalized"  thrift and a 5.0% core capital
requirement for categorization as a "well capitalized" thrift. Goodwill and most
other intangible assets are deducted in determining regulatory


                                       12

<PAGE>




capital  for  purposes  of all  capital  ratios.  In  determining  the amount of
risk-weighted  assets for  purposes of the  risk-based  capital  requirement,  a
savings association must compute its risk-based assets by multiplying its assets
and certain  off-balance  sheet items by  risk-weights,  which range from 0% for
cash and obligations  issued by the United States  Government or its agencies to
100%  for  consumer  and  commercial  loans,  as  assigned  by the  OTS  capital
regulations.  At September  30, 2000,  the Bank  exceeded all of the OTS minimum
regulatory  capital  requirements,  and  was  classified  as a  well-capitalized
institution for regulatory purposes.

     The  following  table  sets  forth  the  capital  position  of the  Bank as
calculated at September 30, 2000 and March 31, 2000. The actual capital  amounts
and  ratios  set forth  below are for the Bank  only  and,  accordingly,  do not
include additional  capital retained by Sound Federal Bancorp.  The decreases in
the Bank's actual  capital  amounts and ratios at September 30, 2000 compared to
March 31, 2000 are  primarily  attributable  to the  deduction of goodwill  from
regulatory  capital and the increase in the Bank's  total  assets  caused by the
Acquisition.

<TABLE>
<CAPTION>
                                                                                OTS Requirements
                                                                    -----------------------------------------
                                                                    Minimum Capital         Classification as
                                             Bank Actual                Adequacy             Well Capitalized
                                         ------------------        ------------------       -----------------
                                         Amount       Ratio        Amount       Ratio        Amount     Ratio
                                         ------       -----        ------       -----        ------     -----
                                                                 (Dollars in thousands)
September 30, 2000
<S>                                       <C>           <C>         <C>           <C>     <C>            <C>
Tangible capital....................  $   31,998        6.2%     $   7,690        1.5%
Tier I (core) capital...............      31,998        6.2         20,507        4.0     $   25,634     5.0%
Risk-based capital:
   Tier I...........................      31,998        14.3                                  13,412     6.0
   Total............................      33,944       15.2         17,883        8.0         22,354     10.0

March 31, 2000
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 September 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  September  30, 2000,  there were no  significant
changes in the Company's assessment of market risk.




                                       13

<PAGE>




Part II--OTHER INFORMATION

Item 1.  Legal Proceedings

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

Item 2.  Changes in Securities and Use of Proceeds

         None

Item 3.  Defaults upon Senior Securities

         None

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

     The Company held its Annual Meeting of Stockholders on August 10, 2000. The
purpose of the meeting was the election of two  directors of the Company and the
ratification  of the appointment of KPMG LLP as auditors for the Company for the
fiscal year ending March 31, 2001. The results of the votes were as follows:

         Proposal 1 - Election of Directors


                                               For                Withheld
                                           ------------          -----------
      Donald H. Heithaus                    4,667,400               37,381
      Joseph A. Lanza                      4, 661,950               42,831


         Proposal 2 - Ratification of Appointment of KPMG LLP

             For                       Against                   Abstain
          ---------                   --------                  --------
            4,653,023                  5,550                     46,208


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

                    The Company filed a report on Form 8-K on July 21, 2000 and
                    subsequently filed a Form 8-K/A on September 29,  2000.
                    These reports provided the required information with respect
                    to the Acquisition.

                       *   Submitted only with filing in electronic format.



                                         14




<PAGE>




                                   SIGNATURES

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






                                                Sound Federal Bancorp
                                                ------------------------
                                                (Registrant)





                                       By:      /s/ Anthony J. Fabiano
                                                -------------------------
                                                Anthony J. Fabiano
                                                Duly Authorized and Chief
                                                Financial and Accounting Officer
November 13, 2000



























                                       15


<PAGE>