ii



                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                -----------------

                                    FORM 10-Q

         (Mark One)

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

                          For the quarterly period ended December 31, 2001

                                       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
            --------------                            February 8, 2002
             Common Stock,                            -----------------
           par value, $0.10                               4,767,292



<PAGE>




                                TABLE OF CONTENTS


                         PART I -- FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

         Consolidated Balance Sheets at December 31, 2001 and March 31, 2001...1

         Consolidated Statements of Income for the Nine Months
         Ended December 31, 2001 and 2000......................................2

         Consolidated Statement of Changes in Stockholders' Equity for the
           Nine months ended December 31, 2001.................................3

         Consolidated Statements of Cash Flows for the Nine months
         Ended December 31, 2001 and 2000......................................4

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

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations................................................ 9

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


                          PART II -- OTHER INFORMATION

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

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

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

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

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

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

         Signatures...........................................................17

<PAGE>





Part 1. - Financial Information
Item 1.  Financial Statements
<TABLE>
<CAPTION>

Sound Federal Bancorp and Subsidiary
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)                                                                         December 31,          March 31,
                                                                                                   2001                2001
                                                                                           --------------------    ------------
Assets
<S>                                                                                        <C>                     <C>
 Cash and due from banks..............................................................     $           6,669       $          5,849
 Federal funds sold..........................................................                         46,358                 35,000
 Certificates of deposit..............................................................                    --                  2,491
 Securities:
    Available for sale, at fair value (including $14,064 and $15,722 pledged
     as                                                     collateral under repurchase
     agreements at December 31, 2001 and March 31, 2001, respectively)................               153,136                157,526
     Held to maturity, at amortized cost (fair value of $28,317 at March 31, 2001)                        --                 28,215
                                                                                                ------------           ------------
          Total securities............................................................               153,136                185,741
                                                                                                ------------           ------------
 Loans, net:
     Mortgage loans...................................................................               356,703                293,954
     Consumer loans...................................................................                 2,268                  1,900
     Allowance for loan losses (Note 5)...............................................                (2,171)                (2,047)
                                                                                                -------------          -------------
          Total loans, net............................................................               356,800                293,807
                                                                                                ------------           -------------

 Accrued interest receivable..........................................................                 3,455                  3,448
 Federal Home Loan Bank stock.........................................................                 3,695                  3,745
 Premises and equipment, net..........................................................                 5,502                  5,850
 Goodwill, net (Note 2)...............................................................                13,970                 13,970
 Other assets.........................................................................                1,557                  3,033
                                                                                                -----------             -----------
           Total assets...............................................................     $         591,142       $        552,934
                                                                                                ============            ============

Liabilities and Stockholders' Equity
  Liabilities:
      Deposits........................................................................     $         508,807       $        473,546
      Borrowings (Note 6).............................................................                14,876                 14,698
      Mortgagors' escrow funds.......................................................                  5,028                  4,486
      Accrued expenses and other liabilities..........................................                2,368                   3,275
                                                                                                ------------            -----------
         Total liabilities............................................................              531,079                 496,005
                                                                                                ------------            -----------
  Stockholders' equity:
     Preferred stock ($0.10 par value; 10,000,000 shares
     authorized;                                                                                           -                      -
     none issued and outstanding)...........................................
     Common stock ($0.10 par value; 20,000,000 shares authorized;
       5,212,218 shares issued).......................................................                   521                    521
     Additional paid-in capital.......................................................               22,429                  22,399
     Treasury stock, at cost (444,926 shares at December 31, 2001 and
        399,926 shares at March 31, 2001).............................................                (4,350)                (3,867)
     Common stock held by the Employee Stock Ownership Plan ("ESOP").................                 (1,152)                (1,297)
     Common stock awards under the Recognition and Retention Plan ("RRP").............                  (280)                  (392)
     Retained earnings................................................................               40,948                  37,313
     Accumulated other comprehensive income, net of taxes (Note 7)....................                 1,947                  2,252
                                                                                                -------------           ------------
          Total stockholders' equity..................................................               60,063                  56,929
                                                                                                ------------            -----------
          Total liabilities and stockholders' equity..................................     $        591,142        $        552,934
                                                                                                ============            ============
</TABLE>

See accompanying notes to unaudited consolidated financial statements.


<page>

Sound Federal Bancorp and Subsidiary
<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
                                                                     For the Quarter Ended        For the Nine Months Ended
                                                                          December 31,                 December 31,
                                                                 ---------------------------     -----------------------
                                                                     2001           2000              2001            2000
                                                                     ----        -------              ----       -    ----
   Interest and Dividend Income
<S>                                                              <C>             <C>             <C>             <C>
    Loans....................................................... $      6,544    $      5,533    $     18,627    $     14,089
    Securities..................................................        2,651           3,343           8,747           8,158
    Federal funds sold and certificates of deposit..............          234             657             714           1,426

    Other earning assets........................................           16             102             186             302
                                                                    ---------       ---------       ---------       ---------
    Total interest and dividend income..........................        9,445           9,635          28,274          23,975
                                                                    ---------       ---------       ---------       ---------


   Interest Expense
    Deposits....................................................        4,393           5,360          14,130          12,693
     Borrowings (Note 6)........................................          241             320             767             657
     Other interest-bearing liabilities.........................           16              21              53              56
                                                                    ---------       ---------       ---------       ---------
    Total interest expense......................................        4,650           5,701          14,950          13,406
                                                                    ----------      ----------      ---------       ---------

    Net interest income.........................................        4,795           3,934          13,324          10,569
    Provision for loan losses (Note 5)..........................           75              50             125             158
                                                                    ---------       ---------       ---------       ---------
    Net interest income after provision for loan losses.........        4,720           3,884          13,199          10,411
                                                                    ---------       ---------       ---------       ---------

   Non-Interest Income
     Service charges and fees...................................          167              96             475             239
     Gain on sale of real estate owned..........................           27              50              84              28
                                                                    ---------       ---------       ---------       ---------
     Total non-interest income..................................          194             146             559             267
                                                                    ---------       ---------       ---------       ---------

   Non-Interest Expense
     Compensation and benefits..................................        1,205           1,218           3,681           3,306
     Occupancy and equipment....................................          441             492           1,134           1,199
     Data processing service fees...............................          273             260             680             427
     Advertising and promotion..................................          109             222             418             522
     Goodwill amortization (Note 2).............................           --             255              --             510
     Other......................................................          507             421           1,377           1,342
                                                                    ---------       ---------       ---------       ---------
     Total non-interest expense.................................        2,535           2,868           7,290           7,306
                                                                    ---------       ---------       ---------       ---------

    Income before income tax expense............................        2,379           1,162           6,468           3,372
    Income tax expense..........................................          914             491           2,456           1,437
                                                                    ---------       ---------       ---------       ---------
    Net income.................................................. $      1,465    $        671    $      4,012    $      1,935
                                                                    =========       =========       =========       =========

    Basic earnings per common share (Note 4).................... $       0.32    $       0.14    $       0.87    $       0.40
                                                                    =========       =========       =========       =========
   Diluted earnings per common share (Note 4)................... $       0.31    $       0.14    $       0.86     $      0.40
                                                                    =========       =========       =========       =========
</TABLE>


See accompanying notes to unaudited consolidated financial statements.


<PAGE>




Sound Federal Bancorp and Subsidiary

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Nine Months Ended December 31, 2001 (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        Equity
                                               -----   -------   ------    -----     --------   --------   -------       ------
<S>                                           <C>        <C>        <C>       <C>          <C>      <C>       <C>          <C>
Balance at March 31, 2001.................. $  521    $ 22,399  $(3,867)  $(1,297)  $  (392)   $37,313    $  2,252       $56,929
Net income.................................     --         --       --        --         -       4,012         --          4,012
Other comprehensive loss (Note 7)..........     --         --       --        --       --          --        (305)          (305)
                                                                                                                         -------
  Total comprehensive income (Note 7)......                                                                                3,707
Repurchase of common stock (45,000 shares).     --         --      (483)      --         --        --          --           (483)
Dividends paid ($0.07 per share)...........     --         --        --       --         --       (377)        --           (377)
Vesting of RRP shares......................     --         --       --        --        112       --           --            112
ESOP shares committed to be released for
   allocation..............................     --          30       --       145       --        --           --            175
                                            -------   --------   -------    ------    --------   ------     -------       ------

Balance at December 31, 2001............... $  521    $ 22,429  $(4,350)  $(1,152)  $  (280)   $40,948    $ 1,947        $60,063
                                            ======    ========  ========   =======    ======== ========   ========     =========


</TABLE>

See accompanying notes to unaudited consolidated financial statements.




<PAGE>

<TABLE>
<CAPTION>

Sound Federal Bancorp and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)                                                                         For the Nine Months Ended
(In thousands)                                                                             December 31,
                                                                                   ------------------------------
                                                                                      2001                2000
                                                                                   -----------        ------------
OPERATING ACTIVITIES
<S>                                                                          <C>                   <C>
  Net income............................................................     $         4,012       $         1,935
  Adjustments to reconcile net income to net cash provided
      by operating activities:
      Provision for loan losses.........................................                 125                   158
      Depreciation, amortization and accretion..........................                (613)                  255
      ESOP and RRP expense..............................................                 287                   276
      Income taxes......................................................               2,331                   200
      Goodwill amortization.............................................                  --                   510
      Gain on sale of real estate owned.................................                 (84)                  (28)
      Other adjustments, net............................................                 213                  (649)
                                                                                  ----------          -------------
            Net cash provided by operating activities...................               6,271                 2,713
                                                                                  ----------          ------------

INVESTING ACTIVITIES
   Purchases of securities available for sale...........................             (37,879)               (2,784)
  Proceeds from the sale of securities available for sale...............                  --                21,888
  Proceeds from principal payments, maturities and calls of securities..              69,703                21,842
  Disbursements for loan originations...................................            (122,266)              (63,590)
  Principal collection on loans.........................................              58,626                25,821
  Net decrease in certificates of deposit...............................               2,491                 5,893
  Cash paid in purchase acquisition, net of cash acquired...............                  --               (33,937)
  Proceeds from sales of real estate owned..............................                 400                   286
  Purchases of premises and equipment...................................                (111)                 (639)
                                                                                  -----------         -------------
                  Net cash used in investing activities.................             (29,036)              (25,220)
                                                                                  -----------         -------------

FINANCING ACTIVITIES
  Net increase in deposits..............................................                35,261              41,326
  Repayment of borrowings...............................................                    --               5,000
  Net increase in mortgagors' escrow funds..............................                   542                   3
  Purchases of treasury stock...........................................                  (483)             (1,124)
  Dividends paid on common stock........................................                  (377)               (436)
                                                                                  -------------        ------------
            Net cash provided by financing activities...................                34,943              34,769
                                                                                  -------------        -----------

  Increase in cash and cash equivalents.................................                12,178              12,262
  Cash and cash equivalents at beginning of period......................                40,849              32,567
                                                                                  ------------         -----------
  Cash and cash equivalents at end of period............................     $          53,027      $       44,829
                                                                                  ============         ===========

SUPPLEMENTAL INFORMATION
  Interest paid.........................................................     $          14,918      $       13,596
  Income taxes (received) paid..........................................                   (63)              1,043
   Loans transferred to real estate owned...............................                   253                 291
                                                                                  ============         ===========
   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 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 consisted
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 July 18,  2000,  the Company  completed  its  acquisition  of  Peekskill
Financial Corporation ("Peekskill").  Peekskill and its wholly-owned subsidiary,
First Federal Savings Bank,  merged with and into the Bank, with the Bank as the
surviving   entity  (the   "Acquisition").   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  was accounted for using the purchase method of accounting
and,  accordingly,  the assets acquired and liabilities assumed were recorded by
the Company at their fair values at the  consummation  date.  Related  operating
results are included in the  Company's  consolidated  financial  statements  for
periods  after  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, until April 1, 2001, was being
amortized to expense over a period of 15 years.

     In July 2001, the FASB issued Statement of Financial  Accounting  Standards
("SFAS") No. 141,  Business  Combinations,  and SFAS No. 142, Goodwill and Other
Intangible Assets.  SFAS No. 141 requires that the purchase method of accounting
be used for all business combinations initiated after September 30, 2001 as well
as all purchase method business combinations completed after September 30, 2001.
SFAS No. 142 requires that goodwill and intangible assets with indefinite useful
lives no longer be  amortized,  but  instead be tested for  impairment  at least
annually in  accordance  with the  provisions of SFAS No. 142. SFAS No. 142 also
requires that  intangible  assets with definite  useful lives be amortized  over
their respective  estimated useful lives to their estimated residual values, and
reviewed for  impairment in  accordance  with SFAS No. 121,  Accounting  for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.

<page>

     The Company adopted SFAS Nos. 141 and 142 as of April 1, 2001. As a result,
the Company  ceased  amortizing  goodwill in  connection  with the  Acquisition.
Goodwill resulting from the Acquisition totaled $15.2 million, and the remaining
balance at December 31, 2001 was $14.0 million. Ceasing amortization of goodwill
resulted in increases  in net income and net income per share (both  annualized)
of $1.0  million and $0.21 per share,  respectively.  As of April 1 (the date of
adoption  of SFAS No.  142) and as of  December  31,  2001,  the Company has not
recognized any impairment of unamortized goodwill.

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 accounting  principles
generally  accepted  in the United  States of  America  have been  condensed  or
omitted  pursuant to the rules and  regulations  of the  Securities and Exchange
Commission;  however,  the Company believes that the disclosures are adequate to
make the  information  presented not misleading.  The operating  results for the
periods  presented are not necessarily  indicative of results to be expected for
any other interim period or for the entire fiscal year ending March 31, 2002.

     The consolidated financial statements have been prepared in conformity with
accounting  principles  generally  accepted in the United States of America.  In
preparing the consolidated financial statements,  management is required to make
estimates  and  assumptions   that  affect  the  reported   amounts  of  assets,
liabilities,  income and expense. Actual results could differ significantly from
these  estimates.  An estimate that is  particularly  susceptible to significant
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, 2001,  included in
the Company's 2001 Annual Report.

4.       Earnings Per Share

     Weighted  average  common  shares  used in  calculating  basic and  diluted
earnings per share for the three months ended  December 31, 2001 were  4,622,016
and  4,677,645,  respectively.  For the nine months  ended  December  31,  2001,
weighted  average shares for  calculating  basic and diluted  earnings per share
were  4,631,398  and  4,679,120,  respectively.  For the quarter and nine months
ended December 31, 2000, weighted average common shares used in calculating both
basic and diluted earnings per share were 4,766,212 and 4,788,280, respectively.
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 these periods.

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
judgments utilizing the best information  available at the time of review. Those
judgments  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):
<TABLE>
<CAPTION>

                                             Three Months Ended              Nine Months Ended              Year Ended
                                                 December 31,                    December 31,               March 31,
                                       -----------------------------  ---------------------------          ---------
                                            2001            2000            2001           2000               2001
                                       -------------   -------------   -------------  ------------          ---------
                                                               (in thousands)
<S>                                    <C>             <C>             <C>            <C>              <C>
Balance at beginning of period....     $     2,097     $     1,946     $     2,047    $     1,188      $         1,188
Provision for loan losses.........              75              50             125            158                  208
Allowance transferred in Acquisition            --              --              --            784                  784
Mortgage loans charged off........             (13)             --             (13)          (134)                (162)
Recoveries........................              12              29              12             29                   29
                                         ---------       ----------      ---------      ----------          ----------
Balance at end of period..........     $     2,171     $     2,025     $     2,171    $     2,025                2,047
                                         =========       =========       =========      =========      ===============
</TABLE>



6.       Borrowings

     The Company is a party to securities  repurchase  agreements with the FHLB.
These  repurchase  agreements  were  assumed  in  the  Acquisition.   Securities
repurchase  agreements consist of the following at December 31, 2001 (dollars in
thousands):
<TABLE>
<CAPTION>

                                                                                   Amortized         Accrued
        Maturity Date                 Call Features                  Rate            Cost            Interest
        -------------                 -------------                  ----            ----            --------
                                                                                      (dollars in thousands)
     <S>                 <C>                                          <C>       <C>                <C>
      January 2008        Quarterly beginning January 2003            7.20%    $       9,790      $       104
      December 2008       Quarterly beginning November 2001           4.72%            5,000               20
                                                                                ------------        ---------
                                                                      6.36%    $      14,790      $       124
                                                                                 ===========        =========
</TABLE>

     The  securities  transferred  to  the  FHLB  subject  to  these  repurchase
agreements include U.S. Government and agency securities available for sale with
a carrying value of $6.1 million and  mortgage-backed  securities  available for
sale with a carrying  value of $8.0  million.  Accrued  interest  related to the
respective securities was $27,000 and $41,000 at December 31, 2001.

     An  outstanding  FHLB  advance  of  $84,000  and  $86,000  is  included  in
borrowings in the consolidated balance sheets at December 31, 2001 and March 31,
2001,  respectively.  This advance  bears  interest at a fixed rate of 8.29% and
matures in 2002.

7.       Comprehensive Loss

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

<TABLE>
<CAPTION>
                                                                                                     Other
                                                    Pre-Tax                   Tax                Comprehensive
                                              _ Income (Loss)___         ___Effect___             Income (Loss)____
Three Months Ended:                                                     (in thousands)
<S>                                             <C>                      <C>                    <C>
   December 31, 2001                        $      (1,153)           $         438          $           (715)
   December 31, 2000                                1,998                     (772)                    1,226


Nine Months Ended:
   December 31, 2001                                 (642)                     337                      (305)
   December 31, 2000                                4,343                   (1,718)                    2,625

</TABLE>


<page>

     Total comprehensive  income (net income and other  comprehensive  income or
loss)  amounted to $750,000 and $1.9 million for the quarters ended December 31,
2001 and 2000,  respectively.  For the nine months  ended  December 31, 2001 and
2000,  total  comprehensive  income  amounted to $3.7 million and $4.6  million,
respectively.

     The Company's  accumulated other comprehensive income, which is included in
stockholders' equity, represents the unrealized gain on securities available for
sale of $3.2 million  less related  income taxes of $1.3 million at December 31,
2001,  and an unrealized  gain of $3.8 million less related income taxes of $1.6
million at March 31, 2001.

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.

<page>

Acquisition

     On July 18,  2000,  the Company  completed  its  acquisition  of  Peekskill
Financial Corporation ("Peekskill").  Peekskill and its wholly-owned subsidiary,
First Federal Savings Bank,  merged with and into the Bank, with the Bank as the
surviving  entity (the  "Acquisition").  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,  related
operating  results  are  included  in  the  Company's   consolidated   financial
statements for periods after the acquisition date.

Financial Condition

     The Company's  total assets amounted to $591.1 million at December 31, 2001
as compared  to $552.9  million at March 31,  2001.  Net loans  increased  $63.0
million or 21.4% to $356.8 million at December 31, 2001 as compared to March 31,
2001. This increase was funded  principally  through a $32.6 million decrease in
our  securities  portfolio  and a $35.3  million  increase in total  deposits to
$508.8  million.  Total  stockholders'  equity  increased  $3.2 million to $60.1
million at December 31, 2001 as compared to $56.9  million at March 31, 2001. We
were able to fund our loan growth without any additional borrowings.  Borrowings
increased to $14.9  million at December 31, 2001 as compared to $14.7 million at
March 31, 2001. This slight  increase was due to the  amortization of a purchase
accounting adjustment related to the borrowings that were assumed as part of the
Acquisition.

Results of Operations

     General.  Net income amounted to $1.5 million or diluted earnings per share
of $0.31 for the quarter ended  December 31, 2001,  as compared to $671,000,  or
$0.14 per share for the quarter  ended  December 31, 2000,  an increase of 118%.
For the nine months ended December 31, 2001, net income amounted to $4.0 million
or diluted earnings per share of $0.86 as compared to $1.9 million, or $0.40 per
share for the same period in the prior year.  The increase in net income for the
quarter  ended  December  31, 2001 as compared to the same  quarter in the prior
year is attributable to an $861,000  increase in net interest  income, a $48,000
increase in non-interest income and a $333,000 decrease in non-interest expense,
partially offset by a $423,000  increase in income tax expense.  The increase in
net income for the nine months ended  December 31, 2001 is due to a $2.8 million
increase in net interest  income,  a $292,000  increase in non-interest  income,
partially  offset by a  $16,000  decrease  in  non-interest  expense  and a $1.0
million increase in income tax expense.

     The Company  completed the acquisition of Peekskill  Financial  Corporation
(the "Acquisition") in July 2000.  Accordingly,  the results for the nine months
ended December 31, 2000 includes the related  operating results for period after
the acquisition date.

     The results for the nine months ended  December 31, 2001 includes  $170,000
of pre-tax refunds of real estate taxes related to branch locations.

     Net Interest Income. Net interest income for the quarter ended December 31,
2001 amounted to $4.8 million,  an $861,000 increase from the same period in the
prior year.  The interest rate spread was 3.25% and 2.90% for the quarters ended
December  31, 2001 and 2000,  respectively.  The net  interest  margin for those
periods was 3.51% and 3.17%,  respectively.  For the nine months ended  December
31, 2001,  net interest  income  amounted to $13.3  million as compared to $10.6
million  for the same  period in the prior year.  The  interest  rate spread was
3.12%  and  2.97%  and the net  interest  margin  was  3.34%  and  3.29% for the
respective  periods.  The  increases  in interest  rate spread and net  interest
margin  are a result of  relative  changes  in the yield and cost of assets  and
liabilities in our portfolio as a result of decreasing  market interest rates in
calendar  2001.  This decrease in market  interest rates has reduced the cost of
interest-bearing  liabilities faster than the rates on  interest-earning  assets
such as loans or securities. However, if market interest rates decrease further,
interest  rate spread and net  interest  margin may decrease  since  competitive
factors could prohibit further  lowering of interest rates on deposit  accounts.
In  addition,  as  interest  rates  increase,  the cost of the  interest-bearing
liabilities  will  increase  faster  than the rates on  interest-earning  assets
thereby causing a decrease in interest rate spread and net interest margin.

<page>

     Interest  Income.  Interest  income totaled $9.4 million during the quarter
ended  December  31, 2001 as compared to $9.6 million for the same period in the
prior year.  This  decrease  is due to a 77 basis point  decrease in the average
yield on  interest-earning  assets to 6.91% partially  offset by a $44.9 million
increase in average interest-earning assets to $542.6 million during the quarter
ended  December  31, 2001 as compared to $497.7  million for the same quarter in
the prior year.  For the nine months  ended  December 31, 2001  interest  income
totaled  $28.3  million as compared to $24.0  million for the same period in the
prior  year.  This  increase  is due to a $103.0  million  increase  in  average
interest-earning  assets to $529.5 million as compared to $426.5 million for the
same period in the prior year,  partially offset by a 37 basis point decrease in
the  average  yield on  interest-earning  assets to 7.09%.  The  increase in the
average balance of interest-earning assets was due primarily to the Acquisition.
The decrease in the average yield on interest-earning  assets reflects declining
market interest rates during the 2001 periods.

     Loans.  Interest  income on loans  increased  $1.0 million or 18.3% to $6.5
million for the current quarter as compared to $5.5 million for the same quarter
in 2000. This increase is due to a $69.5 million increase in the average balance
of loans to $345.3 million, partially offset by a 44 basis point decrease in the
yield  earned to 7.52%.  For the nine months ended  December 31, 2001,  interest
income on loans  amounted to $18.6  million as compared to $14.1 million for the
same  nine-month  period  in 2000.  This  increase  is due to an  $87.1  million
increase in the average  balance of loans  partially  offset by a 22 basis point
decrease in the average yield earned to 7.52%.

     The  growth of the loan  portfolio  is  principally  a result of the lowest
mortgage interest rates in forty years. The low market interest rate environment
created a robust  housing  market and also compelled many consumers to refinance
existing mortgage loans. The Company originated $38.4 million and $122.2 million
of loans  during the quarter and nine months  ended  December 31, 2001 (of which
$25.3  million and $94.7  million for those  respective  periods were fixed rate
loans). As a result, the yield earned on the loan portfolio may decrease further
until market interest rates begin to increase.

     Mortgage-Backed Securities. Interest on mortgage-backed securities amounted
to $2.1  million for the  quarter  ended  December  31, 2001 as compared to $2.5
million  for  the  same  period  in the  prior  year.  The  average  balance  of
mortgage-backed  securities  decreased  $23.7 million to $114.6  million and the
average  yield  increased  10 basis  points to 7.33%.  For the nine months ended
December 31, 2001, interest on mortgage-backed securities increased $1.2 million
to $6.9  million as  compared  to $5.7  million for the same period in the prior
year. The increase in interest on mortgage-backed  securities was due to a $17.8
million  increase in the average  balance to $125.6 million and a 22 basis point
increase  in the  average  yield  earned to 7.27%.  The  increase in the average
balance  and  yield  earned  was a  result  of the  securities  acquired  in the
Acquisition.

     Other  Securities.  Interest  on other  securities  decreased  $289,000  to
$533,000 for the quarter  ended  December 31, 2001,  as compared to $822,000 for
the same quarter in 2000, due to a $3.7 million  decrease in the average balance
of other  securities  to $41.4  million  and a 212 basis  point  decrease in the
average  yield  earned to 5.11%.  For the nine months  ended  December 31, 2001,
interest  on other  securities  amounted  to $1.9  million as  compared  to $2.4
million for the nine months ended December 31, 2000.  This decrease was due to a
$1.9  million  decrease  in the  average  balance of other  securities  to $41.0
million and a 150 basis point decrease in the average yield earned to 6.03%. The
decreases  in average  balance and  average  yield  earned in the  current  year
reflect the calls of securities as interest rates decreased during 2001.

     Federal Funds. For the quarter ended December 31, 2001, interest on Federal
funds decreased  $290,000 to $194,000,  reflecting a 455 basis point decrease in
the average yield earned to 2.08%,  partially offset by an $8.1 million increase
in the average balance to $37.1 million.  For the nine months ended December 31,
2001, interest on Federal funds amounted to $671,000 as compared to $1.0 million
for the same period in the prior year. This decrease is due to a 299 basis point
decrease  in the  average  yield  earned  to 3.05%,  partially  offset by a $6.5
million  increase in the average  balance to $29.2 million.  The decrease in the
average yield earned  reflects the declining  interest rate  environment  during
2001.

     Interest Expense.  Interest expense for the quarter ended December 31, 2001
totaled $4.7 million, as compared to $5.7 million for the quarter ended December
31, 2000. The average balance of  interest-bearing  liabilities  increased $31.7
million to $509.7  million for the quarter  ended  December 31, 2001 from $478.0
million  for the same  quarter in the prior year and the  average  cost of these
liabilities  decreased  112 basis  points to 3.66%.  The decrease in the cost of
interest-bearing liabilities is a result of declining market interest rates. For
the nine months ended December 31, 2001,  interest  expense on  interest-bearing
liabilities increased $1.6 million to $15.0 million as compared to $13.4 million
for the nine months ended December 31, 2000. For these same periods, the average
balance of interest-bearing liabilities increased $102.7 million and the average
cost of these  liabilities  decreased 52 basis points to 3.97%.  The increase in
average  interest-bearing  liabilities in the nine-month period is due primarily
to the Acquisition.

<page>

     Interest  expense on time  deposits  totaled  $3.8  million for the current
quarter as compared to $4.4 million for the same  quarter in 2000.  The increase
is due  primarily  to a $25.7  million  increase in the average  balance of time
deposits to $309.1 million from $283.4 million in the same quarter last year and
a 124 basis point  decrease in the average  cost to 4.86%.  The  decrease in the
average cost is due to a decrease in market  interest rates during 2001. For the
nine months ended December 31, 2001,  interest expense on time deposits amounted
to $12.0  million as compared to $10.0  million for the same period in the prior
year.  This $2.0  million  increase  is due to a $65.5  million  increase in the
average balance of time deposits to $300.6 million as compared to $235.2 million
in the prior year.  The average cost of time deposits  decreased 37 basis points
during the same periods to 5.30%.  The  increase in the average  balance of time
deposits in the nine-month period is primarily a result of the Acquisition.

     Interest on savings  accounts  amounted to $352,000  for the quarter  ended
December  31, 2001 as compared to $665,000  for the quarter  ended  December 31,
2000. The average balance of savings  accounts  decreased $1.2 million to $106.9
million and the average cost  decreased 113 basis points to 1.31%.  For the nine
months ended December 31, 2001,  interest on savings accounts decreased $535,000
to $1.3  million as compared  to the same period in the prior year.  The average
balance of savings  accounts  increased  $17.6 million to $107.6 million for the
nine months  ended  December  31,  2001 as  compared  to the nine  months  ended
December 31,  2000.  The average cost of savings  accounts  decreased  110 basis
points to 1.63% for the same periods.  The  increases in the average  balance of
time  deposits are primarily a result of the  Acquisition.  The decreases in the
average cost are due to decreases in market interest rates during 2001.

     Interest expense on other deposits (NOW and money market accounts) amounted
to $256,000 for the quarter ended  December 31, 2001 as compared to $336,000 for
the same  quarter in the prior  year.  The  average  balance  of these  accounts
increased  $9.5 million to $74.6 million and the average cost decreased 75 basis
points to 1.36%.  For the nine months ended December 31, 2001,  interest expense
on other  deposits  amounted to  $805,000  as compared to $792,000  for the same
period in the prior year. For the same respective  periods,  the average balance
of other  deposits was $71.9  million and $56.7 million and the average cost was
1.51% and 1.90%.

     For the quarter  ended  December  31,  2001,  interest  paid on  borrowings
amounted to  $241,000  as  compared  to $320,000 in the prior year.  The average
balance of borrowings for the quarter was $14.8 million and the average cost was
6.47%.  For the  quarter  ended  December  31,  2000,  the  average  balance  of
borrowings was $17.1 million and the average cost was 7.43%. For the nine months
ended December 31, 2001, interest expense on borrowings was $767,000 as compared
to  $657,000  for the same  period in the prior  year.  The  average  balance of
borrowings  increased  $3.6  million to $14.8  million for the nine months ended
December 31, 2001 as compared to $11.2 million for the same period in 2000.  The
average cost was 6.88% and 7.75% for the same respective  periods.  The increase
in borrowings  consists of FHLB  advances  that were a component of  Peekskill's
capital management strategy and that were assumed in the Acquisition.

     Provision  for Loan Losses.  The  provision for loan losses was $75,000 for
the quarter ended December 31, 2001 as compared to $50,000 for the quarter ended
December 31, 2000.  Non-performing  loans amounted to $771,000 or 0.21% of total
loans at December 31, 2001,  as compared to $1.6 million or 0.54% of total loans
at December 31, 2000. The allowance for loan losses amounted to $2.2 million and
$2.0 million at December 31, 2001 and March 31, 2001, respectively. Charge-offs,
net of  recoveries  amounted to $1,000 for the  quarter  and nine  months  ended
December 31, 2001.  There were no charge-offs for the quarter ended December 31,
2000.  Charge-offs,  net of recoveries  amounted to $105,000 for the nine months
ended December 31, 2000.

     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.

<page>

     Non-Interest Income.  Non-interest income totaled $194,000 and $146,000 for
the quarters ended December 31, 2001 and 2000, respectively. For the nine months
ended December 31, 2001, non-interest income amounted to $559,000 as compared to
$267,000 for the same period in 2000.  Non-interest income consists  principally
of service charges on deposit accounts,  late charges on loans and various other
service fees.  Service fees amounted to $167,000 for the quarter ended  December
31,  2001 as  compared  to $96,000  for the same  quarter in 2000.  For the nine
months  ended  December 31,  2001,  service  fees  totaled  $475,000 as compared
$239,000 for the same period in the prior year. The increase in service fees was
due to increased levels of service charges on deposit accounts,  late charges on
loans and various  other service fees as well as the  Acquisition.  Non-interest
income for the quarter ended December 31, 2001 included a gain of $27,000 on the
sale of real  estate  owned as  compared to $50,000 for the same period in 2000.
The 2001  nine-month  period includes a gain on the sale of real estate owned of
$84,000 as compared to $28,000 in 2000.

     Non-Interest  Expense.  Non-interest  expense  totaled $2.5 million for the
quarter  ended  December  31, 2001 as  compared to $2.9  million for the quarter
ended  December  31,  2000.  This  decrease  is due  primarily  to a decrease of
$113,000 in advertising and promotion  expense,  a $51,000 decrease in occupancy
and  equipment  and the absence of $255,000 in goodwill  amortization  partially
offset by  increases of $13,000 in data  processing  service fees and an $86,000
increase in other non-interest  expense.  For the nine months ended December 31,
2001,  non-interest  expense was virtually unchanged at $7.3 million as compared
to the  same  period  in the  prior  year.  For  the  same  respective  periods,
compensation  and benefits  increased  $375,000,  data processing fees increased
$253,000 and other non-interest expenses increased $35,000.  These increase were
substantially  offset  by a $65,000  decrease  in  occupancy  and  equipment,  a
$104,000  decrease in  advertising  and promotion and the absence of $510,000 in
goodwill amortization.

     Non-interest expense for the nine months ended December 31, 2001 includes a
$170,000 pre-tax refund of real estate taxes related to branch locations.

     Income Taxes.  Income tax expense amounted to $914,000 and $491,000 for the
quarters ended December 31, 2001 and 2000, respectively. The effective tax rates
for those same periods were 38.4% and 42.3%,  respectively.  For the nine months
ended  December 31, 2001 and 2000,  income tax expense  amounted to $2.5 million
and $1.4 million,  respectively.  The effective tax rates for those same periods
were 38.0% and 42.6%, respectively.  The higher effective tax rates in the prior
fiscal year are a result of the non-deductibility of goodwill amortization.

Liquidity and Capital Resources

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

     The Company's primary investing  activities are the origination of mortgage
loans, and the purchase of short-term  investments,  government agency bonds and
adjustable  rate  mortgage-backed   securities.   These  activities  are  funded
primarily by principal repayments on loans, mortgage-backed securities and other
investment  securities  as well as by deposit  growth.  For the quarter and nine
months ended  December 31, 2001,  the Company  originated  loans  totaling $38.4
million and $122.3 million,  respectively, and purchased $13.5 million and $37.9
million of securities,  respectively. In addition, cash outlays of $483,000 were
used to  purchase  the  Company's  common  stock  during the nine  months  ended
December  31,  2001 (no stock  repurchases  occurred  during the  quarter  ended
December  31,  2001).  These  disbursements  were  funded  by $21.3  million  in
principal payments, maturities and calls of securities and $21.0 million in loan
principal  repayments  during the quarter  ended  December 31, 2001 and by $69.7
million in principal  payments,  maturities  and calls of  securities  and $58.6
million in loan principal  repayments for the  nine-month  period.  For the year
ended  March  31,  2001,  the  Company  originated  $88.7  million  of loans and
purchased $28.9 million of securities.

<page>

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

     At December 31, 2001, the Company had outstanding loan commitments of $70.5
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 December 31, 2001, totaled $273.5 million. Management believes that
a significant portion of such deposits will remain with the Company.

     The Bank is subject to certain  minimum  leverage,  tangible and risk-based
capital  requirements  established by regulations of the OTS. These  regulations
require savings associations to meet three minimum capital standards: a tangible
capital  ratio  requirement  of 1.5% of total  assets as adjusted  under the OTS
regulations;  a  leverage  ratio  requirement  of 4.0% of core  capital  to such
adjusted  total assets;  and a risk-based  capital ratio  requirement of 8.0% of
core and  supplementary  capital  to total  risk-based  assets.  The OTS  prompt
corrective  action  regulations  impose  a 4.0%  core  capital  requirement  for
categorization  as an  "adequately  capitalized"  thrift and a 5.0% core capital
requirement for categorization as a "well capitalized" thrift. Goodwill and most
other  intangible  assets are  deducted in  determining  regulatory  capital for
purposes of all  capital  ratios.  In  determining  the amount of  risk-weighted
assets for purposes of the risk-based capital requirement, a savings association
must  compute  its  risk-based  assets by  multiplying  its assets  and  certain
off-balance  sheet  items  by  risk-weights,  which  range  from 0% for cash and
obligations  issued by the United States  Government or its agencies to 100% for
consumer and commercial  loans, as assigned by the OTS capital  regulations.  At
December 31, 2001, the Bank exceeded all of the OTS minimum  regulatory  capital
requirements,   and  was  classified  as  a  well-capitalized   institution  for
regulatory purposes.

         The following table sets forth the capital position of the Bank as of
December 31, 2001 and March 31, 2001. The actual capital amounts and ratios set
forth below are for the Bank only and, accordingly, do not include additional
capital retained by Sound Federal Bancorp.
<TABLE>
<CAPTION>

                                                                                OTS Requirements
                                                                 ----------------------------------------------
                                                                    Minimum Capital         Classification as
                                             Bank Actual               Adequacy              Well Capitalized
                                        -------------------      ---------------------     --------------------
                                         Amount       Ratio        Amount       Ratio        Amount     Ratio
                                         ------       -----        ------       -----        ------     -----
                                                                 (Dollars in thousands)
December 31, 2001
<S>                                   <C>               <C>      <C>              <C>      <C>         <C>
Tangible capital....................  $   38,231        6.7%     $   8,616        1.5%
Tier I (core) capital...............      38,231        6.7         22,976        4.0     $   28,720     5.0%
Risk-based capital:
   Tier I...........................      38,231        13.9                                  16,532     6.0
   Total............................      40,403       14.7         22,043        8.0         27,554     10.0

March 31, 2001
Tangible capital....................  $   34,247        6.4%     $   8,029        1.5%
Tier I (core) capital...............      34,247        6.4         21,410        4.0     $   26,763     5.0%
Risk-based capital:
   Tier I...........................      34,247       14.8                                   13,847     6.0
   Total............................      36,294       15.7         18,463        8.0         23,079     10.0

</TABLE>

<page>

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

     The Company's most  significant  form of market risk is interest rate risk,
as the majority of the Company's assets and liabilities are sensitive to changes
in interest rates. The Company's assets consist primarily of fixed rate mortgage
loans, which have longer maturities than the Company's liabilities which consist
primarily  of  deposits.  The  Company's  mortgage  loan  portfolio,  consisting
primarily of loans secured by residential  real property  located in Westchester
County,  New York and Fairfield  County,  Connecticut,  is also subject to risks
associated with the local economy.  The Company does not own any trading assets.
At December  31,  2001,  the Company  did not have any hedging  transactions  in
place,  such as interest rate swaps and caps.  The Company's  interest rate risk
management  program focuses primarily on evaluating and managing the composition
of the Company's  assets and liabilities in the context of various interest rate
scenarios.  Factors beyond management's  control,  such as market interest rates
and competition, also have an impact on interest income and interest expense.

     During the quarter  ended  December  31,  2001,  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

          None




<PAGE>


                                   SIGNATURES

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






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





                              By:      /s/ Anthony J. Fabiano
                                     -------------------------------------------
                                      Anthony J. Fabiano
                                      Duly Authorized and Chief Financial and
                                      Accounting Officer
February 13, 2002