United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549


                                    Form 10-Q

[x]  Quarterly  Report  pursuant  to  Section  13 or 15 (d)  of  the  Securities
     Exchange Act of 1934

     For the Quarterly Period Ended September 30, 1999

                                       OR

[ ]  Transition  Report  pursuant  to Section  13 or 15(d) of the  Securities
     Exchange Act of 1934

     Commission File Number 0-27178

                         Peekskill Financial Corporation
--------------------------------------------------------------------------------
           (Exact name of the registrant as specified in its charter)

        Delaware                                         13-3858258
--------------------------------------------------------------------------------
(State of incorporation)                   (I.R.S. Employer Identification No.)

                   1019 Park Street, Peekskill, New York 10566
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (914) 737-2777
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

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 12 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
             Class:                                      at November 4, 1999
--------------------------------------------------------------------------------
Common Stock, $0.01 par value                                 1,812,028



<PAGE>


                         Peekskill Financial Corporation

                                    Form 10-Q

                    Quarterly Period Ended September 30, 1999

                         Part I - Financial Information

ITEM 1 - FINANCIAL STATEMENTS  (Unaudited)                           Page

 Condensed Consolidated Balance Sheets at September 30, 1999
     and June 30, 1999                                                3

 Condensed Consolidated Statements of Income for the three
     months ended September 30, 1999 and 1998                         4

 Condensed Consolidated Statements of Changes in Stockholders'
     Equity for the three months ended September 30, 1999 and 1998    5

 Condensed Consolidated Statements of Cash Flows for the three
     months ended September 30, 1999 and 1998                         6

 Notes to Condensed Consolidated Interim Financial Statements         7

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

Other Information                                                    16

Signatures                                                           18



                                       2
<PAGE>


Part I.           FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS

                 Peekskill Financial Corporation and Subsidiary
                      Condensed Consolidated Balance Sheets
                                   (Unaudited)
                        (In thousands, except share data)

                                                        September 30, June 30,
                                                            1999        1999
                                                           --------  --------
Assets:
Cash and due from banks..................................  $    801  $    957
Interest-bearing deposits................................     1,210     3,200
Securities:
  Held-to-maturity, at amortized cost (fair value of
     $116,515 at September 30, 1999 and $118,675
     at June 30, 1999)...................................   117,914   119,122
  Available-for-sale, at fair value (amortized cost of
     $16,500 at September 30, 1999 and June 30, 1999)....    15,388    15,673
                                                           --------  --------
    Total securities.....................................   133,302   134,795

Loans, net of allowance for loan losses of $757 at
     September 30, 1999 and $742 at June 30, 1999........    67,249    63,436
Federal Home Loan Bank stock, at cost....................     1,465     1,463
Accrued interest receivable..............................     1,031     1,094
Office properties and equipment, net.....................     1,096     1,114
Deferred income taxes, net...............................       930       814
Other assets.............................................        82        59
                                                           --------  --------
  Total assets...........................................  $207,166  $206,932
                                                           ========  ========

Liabilities and Stockholders' Equity:
Liabilities:
  Depositor accounts.....................................  $150,013  $148,693
  Securities repurchase agreements and other borrowings..    28,000    28,000
  Mortgage escrow deposits...............................     1,137     1,692
  Other liabilities......................................     1,466     1,196
                                                           --------  --------
    Total liabilities....................................   180,616   179,581
                                                           --------  --------
Stockholders' equity (Note 2):
Preferred stock (par value $0.01 per share; 100,000
   shares authorized; none issued or outstanding)........       ---       ---
Common stock (par value $0.01 per share; 4,900,000
  shares authorized; 4,099,750 shares issued)............        41        41
Additional paid-in capital...............................    40,307    40,305
Unallocated common stock held by employee stock
  ownership plan ("ESOP")................................    (2,665)   (2,706)
Unamortized awards of common stock under recognition
  and retention plan ("RRP").............................      (771)     (771)
Treasury stock, at cost (2,280,122 shares at September 30,
  1999 and 2,211,922 shares at June 30, 1999)............   (35,099)  (34,204)
Retained earnings........................................    25,435    25,183
Accumulated other comprehensive loss.....................      (698)     (497)
                                                           --------  --------
   Total stockholders' equity............................    26,550    27,351
                                                           --------  --------
   Total liabilities and stockholders' equity............  $207,166  $206,932
                                                           ========  ========

See accompanying notes to unaudited condensed consolidated financial statements.

                                       3

<PAGE>


                 Peekskill Financial Corporation and Subsidiary
                   Condensed Consolidated Statements of Income
                                   (Unaudited)
                      (In thousands, except per share data)

                                             For the Three Months
                                              Ended September 30,
                                             --------------------
                                              1999          1998
                                             ------        ------
Interest and dividend income:
 Loans..................................     $ 1,229       $  990
 Securities.............................       2,062        2,289
 Interest-bearing deposits and other....          64           76
                                              ------       ------
  Total interest and dividend income....       3,355        3,355
                                              ------       ------
Interest expense:
 Depositor accounts.....................       1,510        1,513
 Securities repurchase agreements and
  other borrowings......................         362          182
                                              ------       ------
  Total interest expense................       1,872        1,695
                                              ------       ------

  Net interest income...................       1,483        1,660

Provision for loan losses ..............          15           15
                                              ------       ------
  Net interest income after
   provision for loan losses............       1,468        1,645
                                              ------       ------
Non-interest income.....................          71           63
                                              ------       ------
Non-interest expense:
  Compensation and benefits.............         465          455
  Occupancy costs.......................         116          112
  Computer service fees.................          56           52
  Professional fees.....................          49           38
  Federal deposit insurance costs.......          36           36
  Safekeeping and custodial services....          25           29
  Other.................................         145          163
                                              ------       ------
    Total non-interest expense..........         892          885
                                              ------       ------
   Income before income tax expense.....         647          823
Income tax expense......................         250          367
                                              ------       ------
  Net income............................      $  397       $  456
                                              ======       ======
Earnings per share (Note 3):
  Basic.................................       $0.26        $0.18
  Diluted...............................        0.25         0.18

See accompanying notes to unaudited condensed consolidated financial statements.

                                       4

<PAGE>




                 Peekskill Financial Corporation and Subsidiary
      Condensed Consolidated Statements of Changes in Stockholders' Equity
                                   (Unaudited)
                        (In thousands, except share data)

<TABLE>
<CAPTION>

                                                        Unallocated Unamortized
                                                         Common      Awards of                          Accumulated
                                            Additional   Stock        Common                               Other         Total
                                  Common    Paid-in       Held         Stock     Treasury    Retained   Comprehensive Stockholders'
                                   Stock    Capital     By ESOP      Under RRP     Stock     Earnings       Loss        Equity
                                  --------  ---------  -----------  ------------ ----------  ---------  ------------- ------------

<S>                               <C>        <C>        <C>          <C>          <C>         <C>        <C>            <C>
 Balance at June 30, 1999........ $   41     $40,305    $ (2,706)    $    (771)   $(34,204)   $25,183    $   (497)      $27,351

    Net income...................    ---         ---         ---           ---         ---        397         ---           397
    Other comprehensive loss.....                                                                            (201)         (201)
                                                                                                                        -------
         Total comprehensive
    income.......................                                                                                           196
    Dividends paid ($0.09 per
    share).......................    ---         ---         ---           ---         ---       (145)        ---          (145)
    Amortization of RRP awards...    ---         ---         ---            52         ---        ---         ---            52
    RRP award (4,000 treasury
    shares)......................    ---         (10)        ---           (52)         62        ---         ---           ---
    Purchase of 72,200 treasury
       shares....................    ---         ---         ---           ---        (957)       ---         ---          (957)
    ESOP shares committed to be
         released (4,100 shares).    ---          12          41           ---         ---        ---         ---            53
                                  ------     -------    --------     ---------    --------    -------    --------       -------
 Balance at September 30, 1999... $   41     $40,307    $ (2,665)    $    (771)   $(35,099)   $25,435    $   (698)      $26,550
                                  ======     =======    ========     =========    ========    =======    ========       =======

 Balance at June 30, 1998........ $   41     $40,181    $ (2,870)    $    (922)   $(17,730)   $24,508    $     (2)      $43,206

    Net income...................    ---         ---         ---           ---         ---        456         ---           456
    Other comprehensive income...                                                                              65            65
                                                                                                                        -------
         Total comprehensive
    income.......................                                                                                           521
    Dividends paid ($0.09 per
    share).......................    ---         ---         ---           ---         ---       (233)        ---          (233)
    Amortization of RRP awards...    ---         ---         ---            48         ---        ---         ---            48
    RRP award (2,500 treasury
    shares)......................    ---          14         ---           (44)         30        ---         ---           ---
    Purchase of 38,000 treasury
       Shares....................    ---         ---         ---           ---        (612)       ---         ---          (612)
    ESOP shares committed to be
         released (4,100 shares).    ---          26          41           ---         ---        ---         ---            67
                                  ------     -------    --------     ---------    --------    -------    --------       -------
 Balance at September 30, 1998... $   41     $40,221    $ (2,829)    $    (918)   $(18,312)   $24,731    $     63       $42,997
                                  ======     =======    ========     =========    ========    =======    ========       =======
</TABLE>


See accompanying notes to unaudited condensed consolidated financial statements.

                                       5

<PAGE>




                 Peekskill Financial Corporation and Subsidiary
                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)
                                 (In thousands)

                                                                For the Three
                                                                 Months Ended
                                                                September 30,
                                                            --------------------
                                                              1999        1998
                                                            --------   ---------
Cash flows from operating activities:
  Net income............................................... $   397      $  456
  Adjustments to reconcile net income to net cash provided
    by operating activities:
    Provision for loan losses..............................      15          15
    Depreciation and amortization expense..................      26          24
    ESOP and RRP expense...................................     105         115
    Net amortization and accretion of deferred fees,
      discounts and premiums...............................      (6)        (59)
    Net decrease in accrued interest receivable............      63          55
    Net increase in other assets...........................     (23)        (66)
    Deferred tax expense...................................       2          13
    Net increase in other liabilities......................     270         166
                                                            -------      ------
      Net cash provided by operating activities............     849         719
                                                            -------      ------

Cash flows from investing activities:
  Purchases of securities:
    Held-to-maturity.......................................  (6,935)     (7,436)
    Available-for-sale.....................................     ---      (9,992)
  Proceeds from principal payments, maturities
      and calls of securities:
    Held-to-maturity.......................................   8,115      15,893
    Available-for-sale.....................................     ---       3,000
  Originations of loans, net of principal collections......  (3,829)     (4,297)
  Purchases of office properties and equipment.............      (8)        (20)
                                                            -------      ------
     Net cash used in investing activities.................  (2,657)     (2,852)
                                                            -------      ------
Cash flows from financing activities:
  Net increase in depositor accounts.......................   1,319         608
  Net decrease in mortgage escrow deposits.................    (555)       (658)
  Proceeds from Federal Home Loan Bank advance.............     ---       1,000
  Treasury stock purchases.................................    (957)     (1,962)
  Dividends paid...........................................    (145)       (233)
                                                            -------      ------
     Net cash used in financing activities.................    (338)     (1,245)
                                                            -------      ------
Net decrease in cash and cash equivalents..................  (2,146)     (3,378)
Cash and cash equivalents at beginning of period...........   4,157       4,626
                                                            -------      ------
Cash and cash equivalents at end of period................. $ 2,011     $ 1,248
                                                            =======     =======

Supplemental information:
  Interest paid............................................ $ 1,847     $ 1,697
  Income taxes paid........................................      28         318
  Decrease in liability for treasury
     stock purchased, not yet settled .....................     ---       1,350
                                                            =======     =======


See accompanying notes to unaudited condensed consolidated financial statements.

                                       6

<PAGE>


                 PEEKSKILL FINANCIAL CORPORATION AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1. Basis of Presentation

         Peekskill   Financial   Corporation   (the   "Holding   Company")   was
incorporated  in  September  1995 and on  December  29,  1995 became the holding
company for First Federal  Savings Bank (the "Bank") upon the  completion of the
Conversion  of the Bank from a mutual  savings bank to a stock savings bank (the
"Conversion").  The Holding Company and the Bank  (collectively,  the "Company")
are located in Peekskill, New York and the Holding Company's principal business,
subsequent to the Conversion,  is the ownership of its wholly-owned  subsidiary,
the Bank. The accompanying unaudited condensed consolidated financial statements
include the accounts of the Holding Company and the Bank.

         The accompanying  unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted  accounting  principles
for interim  financial  information  and with the  instructions to Form 10-Q and
Rule  10-01 of  Regulation  S-X.  Accordingly,  they do not  include  all of the
information and footnotes required by generally accepted  accounting  principles
for  complete  financial  statements.   The  accompanying   unaudited  condensed
consolidated  financial  statements  should  be read  in  conjunction  with  the
financial  statements  and  related  management's  discussion  and  analysis  of
financial  condition  and results of operations of the Company as of and for the
year ended June 30, 1999 included in the Form 10-K filed with the Securities and
Exchange Commission.  In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been  included  herein.  The results of  operations  for the three  months ended
September  30,  1999  are not  necessarily  indicative  of  results  that may be
expected for the entire fiscal year ending June 30, 2000.


NOTE 2. Stockholders' Equity

         At September 30, 1999, the Company had 2,280,122 common shares held for
treasury at a cost of $35.1  million,  or $15.39 per share.  On August 31, 1999,
the Holding  Company  announced its intention to repurchase up to 100,000 shares
of its common stock in the open market over a one-year  period,  of which 46,900
shares had been  repurchased  as of September 30, 1999.  Shares are purchased at
prevailing market prices from time to time depending on market conditions.

         For income tax purposes, certain capital distributions made by a thrift
institution, such as the Bank, may be deemed to have been made from the thrift's
bad debt reserves.  An amount equal to approximately  one and one-half times the
amount of such a distribution  would be included in the thrift's taxable income,
attributable  to the  "recapture"  of a  portion  of its tax bad debt  reserves.
Distributions resulting in taxable income include distributions in excess of the

                                       7

<PAGE>

thrift's current and accumulated earnings and profits, as calculated for federal
income tax purposes;  distributions  in redemption  of the thrift's  stock;  and
distributions  in  partial  or  complete  liquidation  of the  thrift.  However,
dividends paid from the thrift's current or accumulated  earnings and profits do
not result in taxable income from bad debt reserve recapture.

         All dividends paid to date by the Bank to the Holding Company have been
paid from the Bank's current and accumulated  earnings and profits.  The Holding
Company has relied on dividends from the Bank as the principal source of funding
for its more recent  stock  repurchases.  Since the Bank intends to limit future
dividend  payments to amounts  that will not result in the  recapture of tax bad
debt  reserves,  the amount of  additional  funds which may be  available to the
Holding  Company for future stock  repurchases  will generally be limited to the
amount of the Bank's current and accumulated  earnings and profits.  At June 30,
1999,  the Bank had  approximately  $3.4  million  in  current  and  accumulated
earnings  and  profits  from which it could pay  dividends  without  causing the
recapture of any portion of its bad debt reserves.  Subsequent to June 30, 1999,
the Bank has paid dividends to the Holding Company of $1.0 million.


Note 3. Earnings Per Share

         The Company  reports both basic and diluted  earnings per share ("EPS")
in accordance with Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings  per Share."  Basic EPS excludes  dilution and is computed by dividing
net income available to common  stockholders by the  weighted-average  number of
common  shares  outstanding  for the period.  Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
(such as stock  options)  were  exercised  or  converted  into  common  stock or
resulted in the issuance of common stock that then shared in the earnings of the
entity.  Diluted EPS is computed by dividing net income by the weighted  average
number of common shares outstanding for the period plus common-equivalent shares
computed using the treasury stock method.

                                       8

<PAGE>


         The  table  below  summarizes  the  number of  shares  utilized  in the
Company's EPS  calculations for the three month periods ended September 30, 1999
and 1998. For purposes of computing  basic EPS, net income  applicable to common
stock equaled net income for both periods presented.

                                                   For the Three Months
                                                    Ended September 30,
                                                   --------------------
                                                    1999          1998
                                                   ---------  ---------
                                                      (In thousands)

Weighted average common shares outstanding
   for computation of basic EPS (1)                 1,531        2,516

Common-equivalent shares due to the dilutive
   effect of stock options and RRP awards (2)          29           86
                                                    -----        -----

Weighted average common shares for
   computation of diluted EPS                       1,560        2,602
                                                    =====        =====

(1)  Excludes unvested RRP awards and unallocated ESOP shares that have not been
     committed to be released.

(2)  Computed using the treasury stock method.



Item 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Forward-Looking Statements

         The Company has made, and may continue to make, various forward-looking
statements  with respect to earnings,  credit  quality and other  financial  and
business  matters for periods  subsequent  to September  30,  1999.  The Company
cautions  that  these   forward-looking   statements  are  subject  to  numerous
assumptions, risks and uncertainties, and that statements for subsequent periods
are  subject to greater  uncertainty  because  of the  likelihood  of changes in
underlying factors and assumptions.  Actual results could differ materially from
forward-looking statements.

         In addition to those  factors  previously  disclosed by the Company and
those factors  identified  elsewhere  herein,  the following factors could cause
actual  results  to  differ  materially  from such  forward-looking  statements:
pricing pressures on loan and deposit products; actions of competitors;  changes
in local and national economic conditions;  customer deposit  disintermediation;
changes in customers'  acceptance of the  Company's  products and services;  the
extent and timing of legislative  and regulatory  actions and reforms;  and Year
2000  related  costs  and  issues   substantially   different   from  those  now
anticipated.

         The Company's  forward-looking  statements speak only as of the date on
which such statements are made. By making any  forward-looking  statements,  the
Company assumes no duty to update them to reflect new, changing or unanticipated
events or circumstances.

                                       9

<PAGE>

Comparison of Financial Condition at September 30, 1999 and June 30, 1999

         Total  assets at  September  30, 1999 were $207.2  million  compared to
$206.9 million at June 30, 1999, an increase of $234,000.  This increase was due
primarily to a $3.8 million  increase in net loans,  partially  offset by a $2.1
million  decrease in cash and cash  equivalents,  and a $1.5 million decrease in
total  securities.  Management  intends to  continue  its  current  strategy  of
increasing the loan portfolio  (primarily through the origination of residential
mortgage loans),  as market  conditions  permit, by introducing new products and
stimulating loan demand through  advertising.  Total liabilities  increased $1.0
million  from June 30, 1999 to  September  30,  1999,  due  primarily  to a $1.3
million increase in depositor accounts.

         Total  non-performing  assets decreased  $175,000,  or 15.5%, from $1.1
million at June 30, 1999 to $955,000 at  September  30, 1999.  At September  30,
1999,  the Company  classified  $273,000 of  participation  interests in certain
residential mortgage loans purchased from Thrift Association Service Corporation
on  non-accrual  status,  as compared to $316,000 at June 30, 1999. In addition,
the Company had three loans,  with  principal  balances  totaling  $382,000,  on
non-accrual  status at both  September  30, 1999 and June 30, 1999.  One-to-four
family  mortgage  loans past due more than 90 days but still  accruing  interest
totaled  $300,000 at September  30, 1999  compared to $432,000 at June 30, 1999.
The Company had no real estate  owned at  September  30, 1999 and June 30, 1999.
The allowance for loan losses was $757,000 or 79.3% of  non-performing  loans at
September  30, 1999,  compared to $742,000 or 65.7% of  non-performing  loans at
June 30, 1999.  There were no loan charge-offs or recoveries in the three months
ended September 30, 1999 and 1998.

         Stockholders'  equity decreased $801,000 from $27.4 million at June 30,
1999 to $26.6 million at September  30, 1999.  The decrease  primarily  reflects
treasury stock purchases of $957,000,  dividends paid of $145,000 and a $201,000
decrease    attributable    to   the   net   unrealized   loss   on   securities
available-for-sale,  partially offset by net income of $397,000.  Book value per
share increased from $14.49 at June 30,1999 to $14.59 at September 30, 1999.


Comparison  of Operating  Results for the Three Months Ended  September 30, 1999
and 1998

         Net income decreased  $59,000 to $397,000,  or $0.25 per diluted share,
for the quarter ended September 30, 1999, compared to net income of $456,000, or
$0.18 per diluted share, for the same period last year. Basic earnings per share
amounts were $0.26 and $0.18 for the quarters ended September 30, 1999 and 1998,
respectively.  The  $59,000  decrease  in net income was caused  primarily  by a
$177,000  decrease  in net  interest  income,  partially  offset  by a  $117,000
decrease in income tax expense.  The increase in both diluted and basic earnings
per share is due to a decrease in the number of common shares outstanding.

         Net interest income decreased  $177,000 in the current quarter compared
to the quarter ended  September 30, 1998.  Interest and dividend income remained
constant at $3.4 million for the  quarters  ended  September  30, 1999 and 1998.
Average  interest-earning assets increased

                                       10

<PAGE>

$6.4  million,  offset by a decrease of 21 basis  points in the  average  yield.
Interest  expense  increased  $177,000 to $1.9  million  for the  quarter  ended
September 30, 1999 compared to the same quarter last year. This increase was due
primarily to a $22.1 million  increase in average  interest-bearing  liabilities
partially offset by a 14 basis point decrease in the average cost.

         The  provision  for loan  losses was  $15,000  for the  quarters  ended
September 30, 1999 and 1998.  Management's ongoing evaluation of the adequacy of
the allowance  for loan losses is based on an  assessment of local  economic and
real  estate  market  conditions,   loan  portfolio  growth  and  the  level  of
non-performing loans.

         Non-interest  expense  increased $7,000 for the quarter ended September
30, 1999 compared to the prior year quarter.  The increase was caused  primarily
by increases of $10,000 in  compensation  and benefits,  $11,000 in professional
fees and  $4,000 in  computer  service  fees,  partially  offset  by an  $18,000
decrease in other non-interest expenses.

         Income tax expense for the quarter ended  September 30, 1999  decreased
$117,000  compared  to the same  period  last  year.  The  decrease  is due to a
$176,000  decrease  in pre-tax  income and the  establishment  of a real  estate
investment  trust  ("REIT") in the fourth  quarter of fiscal 1999. The Company's
effective  tax rate was 38.6% in the  current  quarter  compared to 44.6% in the
quarter ended  September 30, 1998,  primarily due to the effect of the REIT. The
REIT is  expected to  continue  to produce  substantial  tax savings and a lower
effective tax rate for the Company.

                                       11

<PAGE>


     The following  table shows the  Company's  average  consolidated  balances,
interest  income and expense,  and average  rates  (annualized)  for the periods
indicated.
<TABLE>
<CAPTION>

                                                                                   Three Months Ended
                                                      ----------------------------------------------------------------------------
                                                                September 30, 1999                     September 30, 1998
                                                      -------------------------------------   ------------------------------------
                                                        Average                    Average      Average                  Average
                                                      Balance (1)    Interest    Yield/Rate   Balance (1)   Interest    Yield/Rate
                                                      -----------    --------    ----------   -----------   --------    ----------
                                                                             (Dollars in thousands)
<S>      <C>                                         <C>           <C>               <C>      <C>         <C>            <C>
Interest-earning assets:
   Loans (2)....................................       $ 65,294      $ 1,229           7.53%    $ 49,722    $   990        7.97%
   Mortgage-backed securities(3)................        112,236        1,684           6.00      127,202      2,035        6.40
   Other debt securities(3).....................         22,531          378           6.71       16,854        254        6.02
   Other interest-earning assets................          4,455           64           5.75        4,347         76        7.00
                                                       --------      -------                    --------    -------
     Total interest-earning assets..............        204,516        3,355           6.56      198,125      3,355        6.77
                                                                     -------                                -------
Non interest-earning assets.....................          3,063                                    2,678
                                                       --------                                 --------
     Total assets...............................       $207,579                                 $200,803
                                                       ========                                 ========

Interest-bearing liabilities:
   Regular savings and club accounts............        $51,206       $  356           2.78%    $ 50,933     $  354        2.78%
   Money market and NOW accounts................         17,037          119           2.79       14,178         94        2.64
   Savings certificates and other...............         81,569        1,035           5.08       77,370      1,065        5.51
   Securities repurchase agreements and other            28,250          362           5.13       13,500        182        5.39
     borrowings.................................       --------       ------                    --------     ------
     Total interest-bearing liabilities.........        178,062        1,872           4.21      155,981      1,695        4.35
                                                                      ------                                 ------
Non interest-bearing liabilities................          2,282                                    1,665
                                                       --------                                 --------
     Total liabilities..........................        180,344                                  157,646
Stockholders' equity............................         27,235                                   43,157
                                                       --------                                 --------
     Total liabilities and stockholders' equity.       $207,579                                 $200,803
                                                       ========                                 ========
Net earning assets..............................       $ 26,454                                 $ 42,144
                                                       ========                                 ========
Net interest income.............................                     $ 1,483                                $ 1,660
                                                                     =======                                =======
Net interest rate spread........................                                      2.35%                               2.42%
                                                                                      ====                                ====
Net interest margin(4)..........................                                      2.90%                               3.35%
                                                                                      ====                                ====
Ratio of average interest-earning assets to
average  interest-bearing liabilities...........          1.15x                                    1.27x
                                                          ====                                     ====

<FN>


(1)  Average  balances are calculated  using  end-of-month  balances,  producing
     results which are not materially different from average daily balances.
(2)  Balances  are net of deferred  loan fees and loans in process.  Non-accrual
     loans are included in the balances.
(3)  Balances   represent   amortized   cost.   Yields   are  not  stated  on  a
     tax-equivalent  basis,  as  the  Company  does  not  invest  in  tax-exempt
     securities.
(4)  Represents net interest  income  divided by average total  interest-earning
     assets.
</FN>
</TABLE>

                                       12

<PAGE>



Liquidity and Capital Resources

         The  Company's primary sources of funds are depositor accounts from its
market  area;   proceeds  from   principal  and  interest   payments  on  loans,
mortgage-backed  securities and other debt  securities;  and borrowings from the
Federal Home Loan Bank of New York ("FHLB") and other sources.  While maturities
and  scheduled  payments on loans and  securities  are a  predictable  source of
funds, deposit flows and loan and securities  prepayments are greatly influenced
by general interest rates, economic conditions and competition.

         The primary investing  activities of the Company are the origination of
mortgage  loans  and the  purchase  of  securities,  and its  primary  financing
activity is the attraction of depositor accounts.

         The Bank may  borrow  from the FHLB of New York  subject  to an overall
limitation of 25% of total assets or $52.3 million at September 30, 1999.  Funds
may be borrowed through a combination of FHLB advances and overnight  borrowings
under  a  $15.5  million  line  of  credit.  The  Bank  had no  such  borrowings
outstanding at September 30, 1999 and June 30, 1999.

         At September  30,  1999,  the Company had $28.0  million of  securities
repurchase agreements and other borrowings.  The Company has utilized borrowings
as a funding source in order to supplement  retail deposit growth and may engage
in additional borrowings, from time to time, as conditions warrant.

         The Bank is required to  maintain a minimum  level of liquid  assets as
defined  by OTS  regulations,  based  upon a  percentage  of  liquid  assets  to
depositor accounts and short-term  borrowings.  For the month of September 1999,
the Bank's  average  daily  total  liquidity  ratio was 12.2%,  compared  to the
minimum OTS requirement of 4.0%.

         The Company's most liquid assets are cash and cash  equivalents,  which
consist  of  interest-bearing  deposits  in  other  financial  institutions  and
short-term highly liquid investments with original maturities of less than three
months that are readily convertible to known amounts of cash. The level of these
assets is dependent on cash flows from the  Company's  operating,  financing and
investing  activities  during  any  given  period.  Cash  and  cash  equivalents
decreased  $2.1  million,  from $4.1 million at June 30, 1999 to $2.0 million at
September 30, 1999.

         The Company anticipates that it will have sufficient funds available to
meet its current commitments and other funding needs. At September 30, 1999, the
Company had commitments to originate loans of $2.9 million. Savings certificates
which are  scheduled to mature in one year or less at September 30, 1999 totaled
$64.4 million.  Management believes that a significant portion of such depositor
accounts will remain with the Company.

         At September  30, 1999,  the Bank's  capital  exceeded  each of the OTS
minimum  capital  requirements  and the  requirements  for  classification  as a
"well-capitalized"  institution.  The

                                       13

<PAGE>

current  minimum  regulatory  capital ratio  requirements  are 1.5% for tangible
capital,  4.0% for Tier I (core) capital and 8.0% for total risk-based  capital.
In order to be considered well-capitalized,  an institution must maintain a core
capital  ratio of at least 5.0%; a Tier I risk-based  capital  ratio of at least
6.0%; and a total  risk-based  capital ratio of at least 10.0%. At September 30,
1999,  the Bank had both  tangible and core capital of $27.0  million  (13.0% of
total  adjusted  assets);  Tier I risk-based  capital of $27.0 million (43.7% of
total  risk-weighted  assets);  and total  risk-based  capital of $27.8  million
(44.9% of total risk-weighted assets).

Impact of Year 2000 Issue

         Like other financial institutions,  the Company relies on computers for
the daily  conduct  of its  business,  all its  transaction  processing  and for
general  data  processing.  The "Year 2000 Issue" arose  because  many  existing
computer  programs  use only the last two digits to refer to a year.  Therefore,
these computer programs may not properly  recognize a year that begins with "20"
instead of the familiar "19",  causing the programs to fail or create  erroneous
results.

         The  Company  has  initiated   formal   communications   with  all  its
significant suppliers to determine the extent to which the Company is vulnerable
to those third  parties'  failure to  remediate  their own Year 2000 Issue.  The
Company's data  processing for its core banking  applications  is performed by a
third party vendor.  These core applications are the Company's  mission-critical
systems  for  purposes  of its Year 2000  plan.  At this  time,  the  vendor has
asserted that it is Year 2000  compliant and the Company,  in  conjunction  with
other customers of this vendor, has tested the remediated system. The testing of
the Company's data  processing  vendor is complete and no  significant  problems
were  encountered.  The Company currently  believes that, with  modifications to
existing  software and conversions to new software,  the Year 2000 Issue will be
mitigated without causing a material adverse impact on its operations.

         Contingency plans have been developed for all mission-critical areas of
the Company's operations. The contingency plan for the Company's data processing
function  involves  the  manual  processing  of  transactions  by the  Company's
employees. Contingency plans for the other mission-critical areas involve having
secondary providers ready if problems with primary providers are encountered.

         The Company utilizes both internal and external resources to reprogram,
or replace, and test all software for Year 2000 modifications. Related costs are
expensed as incurred,  except for costs incurred in the purchase of new software
or hardware, which are capitalized.  At September 30, 1999, the cumulative costs
incurred to address  the Year 2000 Issue  amounted  to  approximately  $160,000.
Costs incurred to date are primarily related to computer hardware purchases, and
management  does not expect that  additional  costs to be incurred in connection
with the Year 2000 Issue will have a material impact on the Company's  financial
condition or results of  operations.  Since  substantially  all of the Company's
loans are  residential  mortgages,  the ability of the  Company's  borrowers  to
become Year 2000 compliant is not a significant concern.

                                       14

<PAGE>

         The estimated costs and timetable for the Year 2000  modifications  are
based on management's  best  estimates,  which were derived  utilizing  numerous
assumptions  of future events  including the continued  availability  of certain
resources,  third party modification plans and other factors. However, there can
be no guarantee  that these  estimates will be achieved and actual results could
differ  materially from those plans.  Specific  factors with respect to both the
Company and its suppliers  that might cause such material  differences  include,
but are not limited to, the availability  and cost of personnel  trained in this
field,  the ability to locate and correct all relevant  computer codes,  testing
complications and similar uncertainties.  In addition, there can be no guarantee
that the systems of other companies on which the Company's  systems rely will be
timely  converted,  or that a  failure  to  convert  by  another  company,  or a
conversion that is  incompatible  with the Company's  systems,  would not have a
material adverse effect on the Company.


Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         There have been no material changes in the Company's interest rate risk
position  since  June 30,  1999.  Other  types of market  risk,  such as foreign
currency exchange rate risk and commodity price risk, do not arise in the normal
course of the Company's business activities.

Annual Meeting

         The Annual Meeting for the fiscal year ended June 30, 2000 will be held
on October 18, 2000 at the main office of the Company.


                                       15

<PAGE>



                           PART II. OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

                  From time to time,  the Company is involved  as  plaintiff  or
         defendant in various legal proceedings  arising in the normal course of
         its  business.  While  the  ultimate  outcome  of these  various  legal
         proceedings  cannot be predicted with  certainty,  it is the opinion of
         management that the resolution of these legal actions should not have a
         material  effect on the  Company's  financial  condition  or results of
         operations.

Item 2.  CHANGES IN SECURITIES

                  None

Item 3.  DEFAULTS UPON SENIOR SECURITIES

                  None

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         a.  The annual meeting of stockholders was held on October 20, 1999

         b.  The matters approved by stockholders at the annual meeting and
             the number of votes cast for,  against or withheld (as well as
             the number of  abstentions  and broker  non-votes)  as to each
             matter are set forth below:

         Election  of the  following  persons  to  serve  a three  year  term as
directors of the Company:

                                                FOR                    WITHHELD
             Edward H. Dwyer                 1,533,675                  64,200
             John A. McGurty, Jr.            1,532,025                  65,850

         Ratification  of the  appointment  of KPMG Peat Marwick LLP as auditors
         for the Company for the fiscal year ending June 30, 2000:

                  For                                 1,575,425
                  Against                                19,050
                  Abstain                                 3,400



                                       16

<PAGE>


Item 5.  OTHER INFORMATION

                  None

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

                  a.   Exhibits:

                       27.  Financial Data Schedule

                  b.   Reports on Form 8-K

                       None



                                       17
<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.


                                        PEEKSKILL FINANCIAL CORPORATION
                                        (Registrant)


DATE:  November 5, 1999                 BY: /s/ Eldorus Maynard
                                            -------------------
                                            Eldorus Maynard
                                            Chairman of the Board and
                                            Chief Executive Officer


DATE:  November 5, 1999                 BY: /s/ William J. LaCalamito
                                            -------------------------
                                            William J. LaCalamito
                                            President
                                            (principal financial officer)








                                       18