July 8, 2002

Dear Stockholder:

We are pleased to invite you to attend the Annual Meeting of Stockholders
of Sound Federal Bancorp (the "Company"). The Annual Meeting will be held at the
Hyatt Regency-Greenwich, 1800 E. Putnam Avenue, Old Greenwich, Connecticut 06870
at 10:00 a.m., (local time) on August 8, 2002.

The enclosed Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted.

At the Annual Meeting stockholders will be given an opportunity to elect
three directors and to ratify the appointment of KPMG LLP as auditors for the
Company's 2003 fiscal year.

The Board of Directors of the Company has determined that the matters to be
considered at the Annual Meeting are in the best interest of the Company and its
stockholders. For the reasons set forth in the proxy statement, the Board of
Directors unanimously recommends a vote "FOR" each matter to be considered.

On behalf of the Board of Directors, we urge you to sign, date and return
the enclosed proxy card as soon as possible even if you currently plan to attend
the Annual Meeting. Your vote is important, regardless of the number of shares
that you own. Voting by proxy will not prevent you from voting in person, but
will assure that your vote is counted if you are unable to attend the meeting.

Sincerely,

/s/ Richard P. McStravick
- -------------------------
Richard P. McStravick
President and Chief Executive Officer

Sound Federal Bancorp
300 Mamaroneck Avenue
Mamaroneck, New York 10543
(914) 698-6400

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On August 8, 2002

Notice is hereby given that the Annual Meeting of Sound Federal Bancorp
(the "Company") will be held at the Hyatt Regency-Greenwich, 1800 E. Putnam
Avenue, Old Greenwich, Connecticut 06870 on August 8, 2002 at 10:00 a.m., local
time.

A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.

The Annual Meeting is for the purpose of considering and acting upon:

1. The election of three directors of the Company;

2. The ratification of the appointment of KPMG LLP as auditors for the Company
for the fiscal year ending March 31, 2003; and

3. Such other matters as may properly come before the Annual Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other
business to come before the Annual Meeting.

Any action may be taken on the foregoing proposals at the Annual Meeting on
the date specified above, or on any date or dates to which by original or later
adjournment the Annual Meeting may be adjourned. Stockholders of record at the
close of business on June 20, 2002 are the stockholders entitled to vote at the
Annual Meeting, and any adjournments thereof.

EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE ANNUAL MEETING, IS
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE
REVOKED AT ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY FILING
WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY
BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE ANNUAL MEETING MAY REVOKE
HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE ANNUAL
MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN
YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN
ORDER TO VOTE PERSONALLY AT THE ANNUAL MEETING.

By Order of the Board of Directors

/s/ Anthony J. Fabiano
------------------------------
Anthony J. Fabiano
Corporate Secretary

Mamaroneck, New York
July 8, 2002

- --------------------------------------------------------------------------------
IMPORTANT: A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO
POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------

PROXY STATEMENT

SOUND FEDERAL BANCORP
300 Mamaroneck Avenue
Mamaroneck, New York 10543
(914) 698-6400

- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
August 8, 2002
- --------------------------------------------------------------------------------

This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of (the "Company") to be used at the
Annual Meeting of Stockholders of the Company (the "Meeting"), which will be
held at the Hyatt Regency-Greenwich, 1800 E. Putnam Avenue, Old Greenwich,
Connecticut 06870 on August 8, 2002 at 10:00 a.m., local time, and all
adjournments thereof. The accompanying Notice of Annual Meeting of Stockholders
and this Proxy Statement are first being mailed to stockholders on or about July
8, 2002.

- --------------------------------------------------------------------------------
REVOCATION OF PROXIES
- --------------------------------------------------------------------------------

Stockholders who execute proxies in the form solicited hereby retain the
right to revoke them in the manner described below. Unless so revoked, the
shares represented by such proxies will be voted at the Meeting and all
adjournments thereof. Proxies solicited on behalf of the Board of Directors of
the Company will be voted in accordance with the directions given thereon. Where
no instructions are indicated, proxies will be voted "FOR" the proposals set
forth in this Proxy Statement for consideration at the Meeting.

Proxies may be revoked by sending written notice of revocation to the
Secretary of the Company, at the address of the Company shown above, voting a
later dated proxy, or by attending the Meeting and voting in person. The
presence at the Meeting of any stockholder who had given a proxy shall not
revoke such proxy unless the stockholder delivers his or her ballot in person at
the Meeting or delivers a written revocation to the Secretary of the Company
prior to the voting of such proxy.

- --------------------------------------------------------------------------------
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
- --------------------------------------------------------------------------------

Holders of record of the Company's common stock, par value $.10 per share
(the "Common Stock"), as of the close of business on June 20, 2002 (the "Record
Date") are entitled to one vote for each share then held. As of the Record Date,
the Company had 4,775,292 shares of Common Stock issued and outstanding, of
which Sound Federal, MHC, the Company's mutual holding company parent (the
"Mutual Holding Company"), owns 2,810,510 shares, or 58.9% of the total shares
outstanding. The presence in person or by proxy of a majority of the outstanding
shares of Common Stock entitled to vote is necessary to constitute a quorum at
the Meeting. Directors are elected by a plurality of the shares voted at the
Meeting without regard to either broker non-votes, or proxies as to which the
authority to vote is being withheld. The ratification of auditors must be
approved by a majority of the shares voted at the Meeting without regard to
broker non-votes or proxies marked "abstain".

Persons and groups who beneficially own in excess of five percent of the
Common Stock are required to file certain reports with the Securities and
Exchange Commission ("SEC") regarding such ownership pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act").

The following table sets forth, as of the Record Date, the shares of Common
Stock beneficially owned by named executive officers and directors individually,
by executive officers and directors as a group and by each person who was the
beneficial owner of more than five percent of the Company's outstanding shares
of Common Stock on the Record Date.

Amount of Shares Percent of Shares
Name and Address of Owned and Nature of Common Stock
Beneficial Owner of Beneficial Ownership Outstanding (2)(3)

Sound Federal, MHC 2,810,510 58.9%
300 Mamaroneck Avenue
Mamaroneck, New York 10543

Named Directors and Executive Officers:(1)

Bruno J. Gioffre 51,368 1.1

Richard P. McStravick 80,286 1.6

Joseph Dinolfo 28,668 0.6

Donald H. Heithaus 40,368 0.8

Joseph A. Lanza 21,595 0.4

Eldorus Maynard 11,000 0.2

James Staudt 18,668 0.4

Samuel T. Telerico 300 --

Anthony J. Fabiano 40,901 0.8
------- -----

All officers and directors
as a group (9 persons) 293,154 6.0%
======= =====

- ------------------------------------

(1) The Company's executive officers and directors are also executive officers
and directors of the Mutual Holding Company and of Sound Federal Savings
and Loan Association (the "Bank").

(2) Includes 5,268 shares awarded to each outside director other than Mr.
Telerico and Mr. Maynard, 21,000 shares, and 14,000 shares awarded to
Messrs. McStravick and Fabiano, respectively, pursuant to the Company's
Recognition and Retention Plan ("RRP"). Also includes 11,000 shares, 27,600
shares, and 24,000 shares for Messrs. Gioffre, McStravick and Fabiano,
respectively, and 8,400 shares each for Messrs. Heithaus, Dinolfo, Lanza
and Staudt subject to option pursuant to the Company's Stock Option Plan
("SOP").

(3) Calculated as a percent of common shares outstanding plus stock options
that are exercisable within 60 days.

- --------------------------------------------------------------------------------
PROPOSAL I--ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------

The Company's Board of Directors is composed of eight members. The
Company's bylaws provide that approximately one-third of the directors are to be
elected annually. Directors of the Company are generally elected to serve for a
three year period or until their respective successors shall have been elected
and shall qualify. The terms of the Board of Directors are classified so that
approximately one-third of the directors are up for election in any one year.
Three directors will be elected at the Meeting. The Board of Directors has
nominated to serve as directors Bruno J. Gioffre, James Staudt and Richard P.
McStravick , each to serve for a three-year term. Messrs. Staudt, Gioffre and
McStravick are currently members of the Board of Directors.

The table below sets forth certain information regarding the composition of
the Company's Board of Directors, including the terms of office of Board
members. It is intended that the proxies solicited on behalf of the Board of
Directors (other than proxies in which the vote is withheld as to one or more
nominees) will be voted at the Meeting for the election of the nominees

nominees identified below. If any nominee is unable to serve, the shares
represented by all such proxies will be voted for the election of such
substitute as the Board of Directors may recommend. At this time, the Board of
Directors knows of no reason why any of the nominees might be unable to serve,
if elected. Except as indicated herein, there are no arrangements or
understandings between any nominee and any other person pursuant to which such
nominee was selected. The Board of Directors recommends a vote "FOR" each of the
nominees to serve as directors until their term expires.

Shares of
Common Stock
Beneficially
Director Term Owned on the Percent
Name Age Positions Held Since (1) to Expire Record Date (2)Of Class
- ---------------------- --------- ---------------------- ----------- ----------- -----------------------

NOMINEES

Bruno J. Gioffre 67 Chairman of the Board 1975 2005 51,368 1.0%

James Staudt 49 Director 1987 2005 18,668 *

Richard P. McStravick 53 President, Chief 1996 2005 80,286 1.6
Executive Officer
and Director

DIRECTORS CONTINUING IN OFFICE

Donald H. Heithaus 67 Director 1978 2003 40,368 *

Joseph A. Lanza 55 Director 1998 2003 21,595 *

Joseph Dinolfo 68 Director 1985 2004 28,668 *

Eldorus Maynard 67 Director 2000 2004 11,000 *

Samuel T. Telerico 66 Director 2001 2004 300 *

- ------------------------------------

* Less than 1%.

(1) Reflects initial appointment to the Board of Directors of the Bank's mutual
predecessor.

(2) Includes 5,268 shares awarded to each outside director other than Mr.
Maynard and Mr. Telerico, and 21,000 shares awarded to Mr. McStravick,
pursuant to the recognition and retention plan. Also includes 11,000
shares, 27,600 shares for Messrs. Gioffre and McStravick, respectively, and
8,400 shares each for Messrs. Staudt, Heithaus, Lanza and Dinolfo subject
to options pursuant to the stock option plan.

The principal occupation during the past five years of each director of the
Company is set forth below. All directors and executive officers have held their
present positions for all five years unless otherwise stated.

Bruno J. Gioffre is the Chairman of the Board of Directors and has been so
since December 1997. Mr. Gioffre was formerly general counsel to the Bank. Mr.
Gioffre is of counsel to the law firm of Gioffre & Gioffre, Professional
Corporation and is a retired Senior Justice for the Town of Rye, New York.

Richard P. McStravick is President and Chief Executive Officer of the Bank.
Mr. McStravick has been employed by the Bank in various capacities since 1977.
Mr. McStravick was appointed to the Board of Directors in 1996. Joseph Dinolfo
is the retired President of the Dinolfo Wilson Agency, Inc. an insurance agency.

Donald H. Heithaus is the President of the Happiness Laundry Service, Inc.

Joseph A. Lanza is the President of Lanza Electric, a private electrical
contractor.

Eldorus Maynard is the retired Chairman of the Board and Chief Executive
Officer of Peekskill Financial Corporation ("Peekskill"). Mr. Maynard was
employed by Peekskill since 1958 and became a member of the Company's Board of
Directors in July 2000.

James Staudt is a partner with the law firm of McCullough, Goldberger &
Staudt. Mr. Staudt is also general counsel to the Bank.

Samuel T. Telerico is a principal with Teledan Enterprises International,
an international trade and consulting firm. Mr. Telerico was previously employed
by American Can Company from 1960 until 1990.

Executive Officer Who Is Not A Director

Anthony J. Fabiano is Senior Vice President, Chief Financial Officer and
Corporate Secretary of the Company. He joined the Bank in July 1998. Prior to
joining the Bank, he was the Chief Financial Officer at MSB Bancorp, Inc.

Ownership Reports by Officers and Directors

The Common Stock is registered pursuant to Section 12(g) of the Exchange
Act. The officers and directors of the Company and beneficial owners of greater
than 10% of the Company's Common Stock ("10% beneficial owners") are required to
file reports on Forms 3, 4, and 5 with the SEC disclosing changes in beneficial
ownership of the Common Stock. SEC rules require disclosure in the Company's
Proxy Statement and Annual Report on Form 10-K of the failure of an officer,
director or 10% beneficial owner of the Company's Common Stock to file a Form 3,
4 or 5 on a timely basis. All Officers and Directors of the Company who are
required to file Forms 3, 4 and 5 filed these forms on a timely basis.

- --------------------------------------------------------------------------------
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
- --------------------------------------------------------------------------------

The business of the Company's Board of Directors is conducted through
meetings and activities of the Board and its committees. During the fiscal year
ended March 31, 2002, the Board of Directors of the Company held 13 regular and
special meetings. During the year ended March 31, 2002, no director attended
fewer than 75 percent of the total meetings of the Board of Directors of the
Company or the Bank and committees on which such director served.

The Executive Committee acts as the Compensation Committee which meets
periodically to review the performance of officers and employees and determine
compensation programs and adjustments. It is comprised of Directors Gioffre,
Staudt, Heithaus, McStravick and Dinolfo. The Executive Committee met three
times during the year ended March 31, 2002.

The Board of Directors serves as the Nominating Committee. During the year
ended March 31, 2002, one meeting of the Nominating Committee was held.

The Audit Committee consists of Directors Heithaus, Maynard and Telerico.
This committee meets on a quarterly basis and as otherwise required to review
audit programs and reports as well as other regulatory compliance issues. The
Audit Committee recommends to the Board of Directors the appointment of
independent auditors for the upcoming fiscal year. The Audit Committee met five
times during the year ended March 31, 2002.

Audit Committee Report

The Audit Committee of the Board is responsible for providing independent,
objective oversight of the Company's accounting functions and internal controls.
The Audit Committee is composed of three directors, all of whom are independent
as defined by the National Association of Securities Dealers' listing standards.
The Audit Committee operates under a written charter approved by the Board of
Directors.

Management is responsible for the Company's internal controls and financial
reporting process. The independent accountants are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with auditing standards generally accepted in the United States and
to issue a report thereon. The Audit Committee's responsibility is to monitor
and oversee these processes.

In connection with these responsibilities, the Audit Committee met with
management and KPMG LLP, the independent auditing firm for the Company, to
review and discuss the March 31, 2002 consolidated financial statements. The
Audit Committee also discussed with KPMG LLP, the matters required by Statement
on Auditing Standards No. 61 (Communication with Audit Committees). The Audit
Committee also received the written disclosures and the letter from our
independent accountants, KPMG LLP, required by Independent Standards Board
Standard No. 1 (Independence Discussions with Audit Committee). Additionally,
the Audit Committee has discussed with KPMG LLP the issue of its independence
from the Company.

Based upon the Audit Committee's discussions with management and the
independent accountants, and the Audit Committee's review of the representations
of management and the independent accountants, the Audit Committee recommended
that the Board of Directors include the audited consolidated financial
statements in the Company's Annual Report on Form 10-K for the year ended March
31, 2002, to be filed with the Securities and Exchange Commission.

This report shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.

This report has been provided by the Audit
Committee:
Directors Heithaus, Maynard and Telerico

Stock Performance Graph

Set forth below is a stock performance graph comparing the yearly total
return on the Company's Common Stock with (a) the monthly cumulative total
return on stocks included in the Nasdaq Composite Index, and (b) the monthly
cumulative total return on stocks for federal savings institutions included in
the Company's Standard Industry Code ("SIC") Index. The Company first issued its
Common Stock effective October 8, 1998. In accordance with the information
presented below is for the period beginning with the closing price of the
Company's Common Stock on October 8, 1998, its first trading day and ending on
March 31, 2002.

There can be no assurance that the Company's stock performance will
continue in the future with the same or similar trend depicted in the graph. The
Company will not make or endorse any predictions as to future stock performance.

Sound Federal Bancorp
Total Return Performance

[GRAPHIC OMITTED]

Period Ending
------------------------------------------------------------------------------
Index 10/08/98 03/31/99 03/31/00 03/31/01 03/31/02
-----
-------------- -------------- -------------- -------------- --------------

oSound Federal Bancorp 100.00 107.35 104.57 125.08 196.45
+Federal Savings Institutions 100.00 107.56 87.49 137.65 163.70
(SIC Code Index)
o Nasdaq Market Index 100.00 145.24 267.45 110.08 111.45

Compensation Committee Interlocks and Insider Participation

The Company does not independently compensate its executive officers,
directors, or employees. The Executive Committee of the Bank retains the
principal responsibility for the compensation of the officers, directors and
employees of the Bank. The Executive Committee consists of Directors Gioffre,
Heithaus, Dinolfo, Staudt and McStravick. The Executive Committee reviews the
benefits provided to the Bank's officers and employees. During the year ended
March 31, 2002 the Executive Committee met three times.

Report of the Compensation Committee

Under rules established by the SEC, the Company is required to provide
certain data and information in regard to the compensation and benefits provided
to the Company's Chief Executive Officer and other executive officers of the
Company. The disclosure requirements for the Chief Executive Officer and other
executive officers include the use of tables and a report explaining the
rationale and considerations that led to fundamental executive compensation
decisions affecting those individuals. In fulfillment of this requirement, the
Executive Committee of the Bank, at the direction of the Board of Directors, has
prepared the following report for inclusion in this proxy statement.

The Board has delegated to the Executive Committee the responsibility of
assuring that the compensation of the Chief Executive Officer and other
executive officers is consistent with the compensation strategy, competitive
practices, the performance of the Bank, and the requirements of appropriate
regulatory agencies. Only non-employee directors who serve on the Executive
Committee participate in executive compensation decision making. Any cash
compensation paid to executive officers is paid by the Bank. The Company does
not currently pay any cash compensation to executive officers.

The primary goal of the Bank and its Executive Committee is to provide
an adequate level of compensation and benefits in order to attract and retain
key executives. The performance of each officer is reviewed annually to
determine his or her contribution to the overall success of the institution.

This report has been provided by the Executive
Committee:
Directors Gioffre, Heithaus, Dinolfo and Staudt

Compensation of Directors

Directors of the Company receive an annual retainer of $500, except for the
Chairman of the Board who receives $1,000. Directors of the Bank receive $1,500
for each meeting attended, except for the Chairman of the Board who receives
$3,000.

- --------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------

The following table sets forth information as to annual and other
compensation for services in all capacities for executive officers who earned
more than $100,000 in salary and bonuses during the fiscal year ended March 31,
2002.

Summary Compensation Table
===================================================================================================================================
Annual Compensation Long-Term
Compensation Awards
Other Restricted
Annual Stock Options/ All Other
Name and Fiscal Salary Bonus Compensation Award(s) SARs Compensation
Principal Position Year ($) ($) ($) (1) ($)(3) (#)(4) Payouts ($) (2)

Richard P. McStravick 2002 171,875 12,000 18,500 -- -- -- 3,800
President and Chief 2001 155,690 9,000 18,675 -- -- -- 3,718
Executive Officer 2000 143,259 8,408 21,900 191,625 46,000 -- 3,718

- ------------------------- ---------------------- ---------- ------------ --------------- ----------- ---------- ----------------
Anthony J. Fabiano 2002 124,500 9,000 -- -- -- -- --
Vice President and Chief 2001 106,167 7,800 -- -- -- -- --
Financial Officer 2000 96,250 5,741 -- 127,750 40,000 -- --
========================= ====================== ========== ============ =============== =========== ========== ================

(1) Represents director's fees for service on the Company's and Bank's Board of
Directors.

(2) Consists of the use of the Bank's automobile.

(3) Amount reflects dollar value of award of 21,000 shares and 14,000 shares of
restricted stock granted to Messrs. McStravick and Fabiano, respectively.
The dollar value per share of such award on the date of grant was $9.125.

(4) On October 20, 1999, pursuant to the Sound Federal Bancorp 1999 Stock
Option Plan, the Company granted these options to purchase shares of common
stock of the Company at an exercise price of $9.125, the market value per
share on the date of the grant.

Benefits

Directors Deferred Fee Plan. The Directors Deferred Fee Plan ("Directors
Plan") is a non-qualified deferred compensation plan into which directors can
defer up to 100% of their board fees earned during the calendar year. All
amounts deferred by a director are fully vested at all times. Amounts credited
to a deferred fee account are assumed to be invested, without charge, at a 6%
interest rate. Upon cessation of a director's service with the Bank, the Bank
will pay the director the amounts credited to the director's deferred fee
account. The amounts will be paid in substantially equal annual installments, as
selected by the director. The date of the first installment payment also will be
selected by the director. The Directors' Plan permits each director to determine
whether to invest all or a portion of such Director's account in Common Stock of
the Company. If a director elects to invest all or a portion of his or her
account in Common Stock, the amount so invested will be credited with earnings
and appreciation (or depreciation) equivalent to that which would be earned on
such investment and the amount not invested in Common Stock will continue to
earn interest at a 6% interest rate.

If the director dies before all payments have been made, the remaining
payments will be made to the beneficiary designated by the director in the same
form that payments were made to the director. If a director dies before
receiving any payments, the Bank shall pay the director's account to the
director's beneficiary, commencing within 30 days of the director's death, over
the period initially elected by the director. At the request of the beneficiary,
and with the approval of the Board, the director's benefits may be paid to the
beneficiary in a lump sum. The director may request a hardship distribution of
all or part of his or her benefits if the director suffers an unforeseeable
emergency, defined as a severe financial hardship to the director resulting from
a sudden and unexpected illness or accident of the director or his or her
dependent, loss of the director's property due to casualty, or other similar

extraordinary and unforeseeable circumstances arising as a result of events
beyond the director's control.

Executive Agreements. The Bank has employment agreements with Messrs.
McStravick and Fabiano. The agreements with Messrs. McStravick and Fabiano have
a term of three years and may be extended for an additional 12 months on each
anniversary date so that the remaining term shall be 36 months. If the agreement
is not renewed, the agreement will expire 36 months following the anniversary
date. Under the agreements, the base salaries for Messrs. McStravick and Fabiano
are $178,000 and $148,000, respectively. In addition to the base salary, each
agreement provides for, among other things, participation in retirement plans,
stock option plans and other employee and fringe benefits applicable to other
employees. The agreements provide for termination by the Bank for cause at any
time, in which event, the executive would have no right to receive compensation
or other benefits for any period after termination. In the event the Bank
terminates the executive's employment for reasons other than disability or for
cause, or in the event of the executive's termination of employment for good
reason upon (i) failure by the Bank to comply with any material provision of the
agreement, which failure has not been cured within 10 days after a notice of
noncompliance is issued by the executive, (ii) following a change in control (as
defined) at any time during the term of the agreement, or (iii) any purported
termination of the executive's employment which is not pursuant to a valid
notice of termination, the executive would be entitled to severance pay in an
amount equal to three times the average annual compensation (computed on the
basis of the most recent five (5) taxable years) includable in gross income for
federal income tax purposes. Messrs. McStravick and Fabiano would receive an
aggregate of approximately $486,000 and $383,000, respectively, pursuant to
their employment agreements upon a change in control of the Bank, based upon
current levels of compensation. The Bank would also continue, at the Bank's
expense, the executive's life, health, dental and other applicable benefit plan
coverage until the executive attains the age of 70 years, provided, however,
that the Bank's obligation terminates if the executive receives equivalent
medical or dental coverage from a new employer. The executive is entitled to
participate in the Bank's medical, dental and life insurance coverage and
reimbursement plans to the extent that such plans exist, until the executive's
death. Under each agreement, if the executive becomes disabled or incapacitated
to the extent that the executive is unable to perform his duties, he will be
entitled to 100% of his compensation for the first six months, and 60%
thereafter for the remaining term of the agreement. Any disability payment is
reduced to the extent benefits are received under disability insurance, workers'
compensation or other similar program.

In July 2001, the Company entered into employment agreements with Messrs.
McStravick and Fabiano. The Company employment agreements with each executive
contain substantially similar provisions to the Bank employment agreements,
except that the Company employment agreements provide each executive
indemnification against any excise taxes which may be owed by the executive for
any payments made in connection with a change in control which would constitute
"excess parachute payments" under Section 280G of the Code. The indemnification
payment would be the amount necessary to ensure that the amount of such payments
and the value of such benefits received by the executive equal to the amount of
such payments and the value of such benefits as the executive would receive in
the absence of such excise tax, including any federal, state and local taxes on
the Company's payment to the executive attributable to such taxes. The
agreements with the Company do not provide for additional compensation to either
executive.

Director Emeritus Plan. The Director Emeritus Plan is a non-qualified
retirement plan. Under the Director Emeritus Plan, any director who attains the
age of 70 years after the completion of 15 years of service as a director
qualifies for director emeritus status. A director who has completed five years
of service as a director qualifies for director emeritus if termination of
service is due to the merger, consolidation, takeover or dissolution of the
Bank. Under the Director Emeritus Plan, a director emeritus is entitled to the
same compensation that the Director received when he or she retired as a
director, without the obligation of attendance at meetings of the Board of
Directors. Compensation is paid to the director emeritus from the date of
attainment of such status until age eighty-five, or for fifteen years or death
whichever comes first.

Defined Benefit Pension Plan. The Bank maintains two defined benefit
pension plans, one of which was assumed at the time the Company completed the
acquisition of Peekskill Financial Corporation ("Retirement Plans"). Employees
age 21 or older who have worked at the Bank for a period of one year and have
been credited with 1,000 or more hours of service with the Bank during the year
are eligible to accrue benefits under the Retirement Plans. The Bank contributes
each year, if necessary, an amount to the Retirement Plans to satisfy the
actuarially determined minimum funding requirements in accordance with the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). For the
year ended March 31, 2002, the Bank made contributions to the Retirement Plans
of approximately $401,000. At March 31, 2002, the total market value of the
assets in the Retirement Plans trust funds was approximately $6.8 million.

In the event of retirement on or after the normal retirement date (i.e.,
the first day of the calendar month coincident with or next following the later
of age 65 or the 5th anniversary of participation in the Retirement Plans, or,
for a participant prior to January 1, 1992, age 65), the plan is designed to
provide a single life annuity. For a married participant, the normal form of
benefit is an actuarially reduced joint and survivor annuity where, upon the
participant's death, the participant's spouse is entitled to receive a benefit
equal to 50% of that paid during the participant's lifetime. Alternatively, a
participant may elect (with proper spousal consent, if necessary) from various
other options, including a joint and 100% survivor annuity, joint and 66-2/3%
survivor annuity, joint and 50% survivor annuity, years certain option and
social security option. The normal retirement benefit provided is an amount
equal to the difference between 4% of final earnings (as defined in the plan)
and 0.65% of the final average compensation (average earnings during the last
three (3) calendar years of service) up to the Social Security taxable wage
base, multiplied by the participant's years of credited service (up to a maximum
of 15 years). Retirement benefits are also payable upon retirement due to early
and late retirement or death. A reduced benefit is payable upon early retirement
at age 55 and the completion of 5 years of vested service with the Bank. Fifty
percent of the normal retirement benefit will be paid to a surviving spouse if
the participant dies while in active service and has attained age 50 with 10
years of vested service. The preretirement death benefit is reduced by 1.96% for
each year the spouse is more than 10 years younger than the participant. If the
participant has not attained age 50 with 10 years of service, but has completed
5 years of service, the spouse will be eligible for a reduced benefit payable as
a joint and 50% annuity. Upon termination of employment other than as specified
above, a participant who has five years of vested service is eligible to receive
his or her accrued benefit commencing, generally, on the employee's normal
retirement date, or, if elected, on or after reaching age 55.

The following table indicates the annual retirement benefit that would be
payable under the Retirement Plans upon retirement at age 65 in calendar year
2001, expressed in the form of a single life annuity for the final average
salary and benefit service classifications specified below.

Final Average Years of Service and Benefit Payable at Retirement
--------------------------------------------------
Compensation 15 20 25 30
------------ ----------- ----------- ----------- ----------

$ 50,000 $ 26,372 $ 26,372 $ 26,372 $ 26,372
$ 75,000 $ 41,372 $ 41,372 $ 41,372 $ 41,372
$ 100,000 $ 56,372 $ 56,372 $ 56,372 $ 56,372
$ 125,000 $ 71,372 $ 71,372 $ 71,372 $ 71,372
$ 150,000 $ 86,372 $ 86,372 $ 86,372 $ 86,372
$ 170,000 $ 98,372 $ 98,372 $ 98,372 $ 98,372

As of March 31, 2002, Mr. McStravick and Mr. Fabiano had 24 years and four
years, respectively, of credited service (i.e., benefit service) under the
Retirement Plans.

401(k) Plan. The Bank maintains the Sound Federal Savings and Loan
Association 401(k) Savings Plan in RSI Retirement Trust (the "401(k) Plan")
which is a qualified, tax-exempt profit sharing plan with a salary deferral
feature under Section 401(k) of the Code. Employees who have attained age 21 and
have completed one year of employment are eligible to participate, provided,

however, that leased employees, employees paid on an hourly or contract basis,
employees covered by a collective bargaining agreement and owner employees (as
defined in the plan) are not eligible to participate. Eligible employees are
entitled to enter the 401(k) Plan on a monthly basis.

Under the 401(k) Plan, participants are permitted to make salary reduction
contributions (in whole percentages) equal to the lesser of (i) from 1% to 10%
of compensation or (ii) $10,000 (as indexed annually). For these purposes,
"compensation" includes wages, salary, fees and other amounts received for
personal services prior to reduction for the participant contribution to the
401(k) plan, commissions, compensation based on profits, overtime, bonuses, wage
continuation payments due to illness or disability of a short-term nature,
amounts paid or reimbursed for moving expenses, and the value of any
nonqualified stock option granted to the extent includable in gross income for
the year granted. Compensation does not include contributions made by the Bank
to any other pension, deferred compensation, welfare or other employee benefit
plan, amounts realized from the exercise of a nonqualified stock option or the
sale of a qualified stock option, and other amounts which received special tax
benefits. Compensation does not include compensation in excess of the Code
Section 401(a)(17) limits (i.e., $200,000 in 2002). Prior to January 1, 1999,
the Bank matched 50% of the first 10% of salary that a participant contributes
to the 401(k) Plan. The Bank ceased matching contributions on February 1, 1999.
All contributions and earnings are fully and immediately vested. A participant
may withdraw salary reduction contributions, rollover contributions and matching
contributions in the event the participant suffers a financial hardship. A
participant may make a withdrawal from his accounts for any reason after age 59
1/2.

The 401(k) Plan permits employees to direct the investment of his or her
own accounts into various investment options including an "Employer Stock Fund."
Participants are entitled to direct the trustee as to how to vote his or her
allocable shares of Common Stock in the Employer Stock Fund.

Plan benefits will be paid to each participant in the form of a single cash
payment at normal retirement age unless earlier payment is selected. If a
participant dies prior to receipt of the entire value of his or her 401(k) Plan
accounts, payment will generally be made to the beneficiary in a single cash
payment as soon as possible following the participant's death. Payment will be
deferred if the participant had previously elected a later payment date. If the
beneficiary is not the participant's spouse, payment will be made within one
year of the date of death. If the spouse is the designated beneficiary, payment
will be made no later than the date the participant would have attained age 70
1/2. Normal retirement age under the 401(k) Plan is age 65. Early retirement age
is age 55.

At March 31, 2002, the total market value of the assets in the 401(k) Plan
was approximately $1.9 million.

Stock Option Plan. During the year ended March 31, 2000, the Company
adopted, and the Company's stockholders approved, the 1999 Stock Option Plan
(the "Stock Option Plan"). Pursuant to the Stock Option Plan, options to
purchase 94,500 shares were granted to non-employee directors (including two
directors emeriti) at an exercise price of $9.125 per share, the fair market
value of the underlying shares on the date of the award. The term of the options
is ten years from the date of grant, and the shares subject to awards will be
adjusted in the event of any merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, combination or exchange of shares
or other change in the corporate structure of the Company. The awards included
an equal number of reload options ("Reload Options"), limited stock appreciation
rights ("Limited Rights") and dividend equivalent rights ("Dividend Equivalent
Rights"). A Limited Right gives the option holder the right, upon a change in
control of the Company or the Bank, to receive the excess of the market value of
the shares represented by the Limited Rights on the date exercised over the
exercise price. The Limited Rights are subject to the same terms and conditions
as the stock options. Payment upon exercise of Limited Rights will be in cash,
or in the event of a merger transaction, for shares of the acquiring corporation
or its parent, as applicable. The Dividend Equivalent Rights entitle the option
holder to receive an amount of cash at the time that certain extraordinary
dividends are declared equal to the amount of the extraordinary dividend
multiplied by the number of options that the person holds. For these purposes,
an extraordinary dividend is defined as any dividend where the rate of dividend
exceeds the Bank's weighted average cost of funds on interest-bearing
liabilities for the current and preceding three quarters. The Reload Options
entitle the option holder, who has delivered shares that he or she owns as

payment of the exercise price for option stock, to a new option to acquire
additional shares equal in amount to the shares he or she has traded in. Reload
Options may also be granted to replace option shares retained by the employer
for payment of the option holder's withholding tax. The option price at which
additional shares of stock can be purchased by the option holder through the
exercise of a Reload Option is equal to the market value of the previously owned
stock at the time it was surrendered. The option period during which the Reload
Option may be exercised expires at the same time as that of the original option
that the holder has exercised.

Set forth below is certain information concerning options outstanding to
the Named Executive Officers at March 31, 2002. No options were granted to the
Named Executive Officers during fiscal year 2002. No options were exercised by
the Named Executive Officers during fiscal year 2002.

FISCAL YEAR-END OPTION VALUES
=========================================================================================================================

Number of Unexercised Value of Unexercised In-
Options at The-Money Options at
Shares Acquired Value Year-End Year-End (1)
Name Upon Exercise Realized
Exercisable/Unexercisable Exercisable/Unexercisable
(#) ($)

Richard P. McStravick -- $-- 27,600/18,400 $171,810/$114,540
Anthony J. Fabiano -- $-- 24,000/16,000 $149,400/$99,600
=========================== ================= ================= ========================== ==========================
- ------------------------------------

(1) Based on a market value of $15.35 per share at March 31, 2002 and an
exercise price of $9.125.

Recognition and Retention Plan. During the fiscal year ended March 31, 2000
the Company adopted, and the Company's stockholders approved, the 1999
Recognition and Retention Plan (the "Recognition Plan"). Pursuant to the
Recognition Plan, 5,268 shares of stock were awarded to each non-employee
director, except for Messrs. Maynard and Telerico who did not receive awards,
and 21,000 and 14,000 shares were awarded to Mr. McStravick and Mr. Fabiano,
respectively.

The Company does not have any equity compensation program that was not
approved by stockholders other than its employee stock ownership plan.

Set forth below is certain information as of March 31, 2002 regarding
equity compensation to directors, directors emeriti and executive officers of
the Company approved by stockholders.

Number of securities to be Number of securities
issued upon exercise of Weighted average remaining available for
Plan outstanding options and rights exercise price issuance under plan
---- ------------------------------ -------------- -------------------

Equity compensation to directors and
executive officers approved by
stockholders....................... 180,500 $9.13 --
Total..................... 180,500 $9.13 --
=================================== ============================= ======================= =============================

Employee Stock Ownership Plan and Trust

The Bank established an employee stock ownership plan ("ESOP") for eligible
employees. Employees age 21 or older who have worked at the Bank for a period of
one year and have been credited with 1,000 or more hours of service during the
year are eligible to participate. The ESOP borrowed funds from the Company and
used those funds to purchase 192,125 shares of the Company Common Stock. The
loan is collateralized by the Common Stock purchased by the ESOP. The Bank will
contribute to the ESOP sufficient funds to pay the principal and interest on the
loan over ten years. The loan bears interest at a floating rate equal to the
prime interest rate published in the Wall Street Journal. Shares purchased by
the ESOP are held in a suspense account for allocation among participants as the
loan is repaid.

Shares are released from the suspense account in an amount proportional to
the repayment of the ESOP loan and are allocated among ESOP participants on the
basis of compensation in the year of allocation. Participants in the ESOP
received credit for service prior to the effective date of the ESOP. A
participant vests in 100% of his or her account balance after 5 years of
credited service. A participant who terminates employment for reasons other than
death, retirement, disability or following a change in control prior to five
years of credited service will forfeit the nonvested portion of his or her
benefits under the ESOP. Benefits are payable in the form of Common Stock and
cash upon death, retirement, disability or separation from service.
Alternatively, a participant may request that the benefits be paid entirely in
the form of Common Stock. The Company recognized an expense of $246,000 to the
ESOP in fiscal year 2002 and allocated 19,213 shares of Common Stock to
participants.

In connection with the establishment of the ESOP, the Bank established a
committee of non-employee directors to administer the ESOP and appointed an
independent financial institution to serve as trustee of the ESOP. The ESOP
committee may instruct the trustee regarding investment of funds contributed to
the ESOP. The ESOP trustee, subject to its fiduciary duty, must vote all
allocated shares held in the ESOP in accordance with the instructions of
participating employees provided such action does not violate ERISA standards.
Under the ESOP, nondirected shares, and shares held in the suspense account,
will be voted in a manner calculated to most accurately reflect the instructions
it has received from participants regarding the allocated stock so long as such
vote is in accordance with the provisions of ERISA.

- --------------------------------------------------------------------------------
TRANSACTIONS WITH CERTAIN RELATED PERSONS
- --------------------------------------------------------------------------------

Transactions With Certain Related Persons

The Bank offers to directors, officers, and employees loans which are made
by the Bank to such persons in the ordinary course of business on substantially
the same terms (other than interest rate), including collateral, as those
prevailing at the time for comparable transactions with other persons, and which
do not involve more than the normal risk of collectibility or present other
unfavorable features. All such loans were performing in accordance with their
terms as of the date of this proxy statement. Federal regulations permit
executive officers and directors to participate in loan programs that are
available to other employees, so long as the director or executive officer is
not given preferential treatment compared to other participating employees. The
interest rate on loans to directors and officers is the same as that offered to
the Bank's other employees.

Loans made to directors and named executives of the Company amounted to
$1.5 million at May 31, 2002 with the largest amount of indebtedness during the
past fiscal year amounting to $1.5 million.

Bruno J. Gioffre, in addition to his duties as Chairman of the Board of the
Company, is counsel to the law firm of Gioffre & Gioffre, Professional
Corporation which represents the Bank in mortgage loan transactions. Prior to
January 1, 1999, Mr. Gioffre also acted as general counsel to the Bank. For the
year ended March 31, 2002, the Bank paid Gioffre & Gioffre, Professional
Corporation fees of $179,000. The terms and conditions of these fees and
services are substantially the same as those for similar transactions with other
parties.

James Staudt, in addition to his duties as a Director of the Company, is a
partner in the law firm of McCullough, Goldberger & Staudt which also represents
the Bank in mortgage loan transactions. Effective January 1, 1999, Mr. Staudt is
also general counsel to the Company. For the year ended March 31, 2002, the Bank
paid McCullough, Goldberger & Staudt fees of $62,000 and paid Mr. Staudt legal
fees of $25,000 for his services as general counsel.

- --------------------------------------------------------------------------------
PROPOSAL II--RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------

The Board of Directors of the Company has approved the engagement of KPMG
LLP to be the Company's auditors for the fiscal year ended March 31, 2002,
subject to the ratification of the engagement by the Company's stockholders. At
the Meeting, stockholders will consider and vote on the ratification of the
engagement of KPMG LLP for the Company's fiscal year ending March 31, 2003. A
representative of KPMG LLP is expected to attend the Meeting to respond to
appropriate questions and to make a statement, if deemed appropriate.

Set forth below is certain information concerning aggregate fees billed for
professional services rendered by KPMG LLP during the year ended March 31, 2002:

Audit Fees................ $ 112,500
Tax Services.............. $ 49,250
All Other Fees............ $ 19,500

KPMG LLP was not paid fees by the Company relating to financial information
systems design and implementation. All other fees represent fees incurred in
connection with the acquisition of Peekskill.

In order to ratify the selection of KPMG LLP as the auditors, the proposal
must receive at least a majority of the votes cast, either in person or by
proxy, in favor of such ratification. The Board of Directors recommends a vote
"FOR" the ratification of KPMG LLP as auditors for the fiscal year.

- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------

In order to be eligible for inclusion in the Company's proxy materials for
next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's executive office, 300
Mamaroneck Avenue, Mamaroneck, New York 10543, no later than March 11, 2003. Any
such proposals shall be subject to the requirements of the proxy rules adopted
under the Exchange Act.

The Bylaws of the Company provide an advance notice procedure for certain
business, or nominations to the Board of Directors, to be brought before an
annual meeting. In order for a stockholder to properly bring business before an
annual meeting, or to propose a nominee to the Board, the stockholder must give
written notice to the Secretary of the Company at least five (5) days before the
date fixed for such meeting. The notice must include the stockholder's name,
record address, and number of shares owned by the stockholder, describe briefly
the proposed business, the reasons for bringing the business before the annual
meeting, and any material interest of the stockholder in the proposed business.
In the case of nominations to the Board, certain information regarding the
nominee must be provided. Nothing in this paragraph shall be deemed to require
the Company to include in its proxy statement and proxy relating to an annual
meeting any stockholder proposal which does not meet all of the requirements for
inclusion established by the SEC in effect at the time such proposal is
received.

- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------

The Board of Directors is not aware of any business to come before the
Meeting other than the matters described above in the Proxy Statement. However,
if any matters should properly come before the Meeting, it is intended that
holders of the proxies will act as directed by a majority of the Board of
Directors, except for matters related to the conduct of the Meeting, as to which
they shall act in accordance with their best judgment.

The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Bank may solicit proxies
personally or by telegraph or telephone without additional compensation.

A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 2002 will be furnished without charge to stockholders as of the
record date upon written request to the Corporate Secretary, Sound Federal
Bancorp 300 Mamaroneck Avenue, Mamaroneck, New York 10543.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ Anthony J. Fabiano
-----------------------------------
Anthony J. Fabiano
Corporate Secretary
Mamaroneck, New York
July 8, 2002

REVOCABLE PROXY

SOUND FEDERAL BANCORP
ANNUAL MEETING OF STOCKHOLDERS
August 8, 2002

The undersigned hereby appoints the full Board of Directors, with full
powers of substitution to act as attorneys and proxies for the undersigned to
vote all shares of Common Stock of the Company which the undersigned is entitled
to vote at a Annual Meeting of Stockholders ("Meeting") to be held at the Hyatt
Regency-Greenwich, 1800 E. Putnam Avenue, Old Greenwich, Connecticut 06870 at
10:00 a.m., (local time) on August 8, 2002. The official proxy committee is
authorized to cast all votes to which the undersigned is entitled as follows:

FOR VOTE
WITHHELD

1. The election as directors of all |-| |-|
nominees listed below (except as
marked to the contrary below)

Bruno J. Gioffre
James Staudt
Richard P. McStravick

INSTRUCTION: To withhold your vote for one or
more nominees, write the name of the nominee(s) on
the lines below.

FOR AGAINST ABSTAIN

2. The ratification of the appointment |-| |-| |-|
of KPMG LLP as auditors for the fiscal
year ending March 31, 2003.

The Board of Directors recommends a vote "FOR" each of the listed proposals.

- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED ABOVE. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THE
ABOVE-NAMED PROXIES AT THE DIRECTION OF A MAJORITY OF THE BOARD OF DIRECTORS. AT
THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE
- --------------------------------------------------------------------------------

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

Should the undersigned be present and elect to vote at the Meeting or at
any adjournment thereof and after notification to the Secretary of the Company
at the Meeting of the stockholder's decision to terminate this proxy, then the
power of said attorneys and proxies shall be deemed terminated and of no further
force or effect. This proxy may also be revoked by sending written notice to the
Secretary of the Company at the address set forth on the Notice of Annual
Meeting of Stockholders, or by the filing of a later proxy statement prior to a
vote being taken on a particular proposal at the Meeting.

The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of the Meeting and a proxy statement dated
July 8, 2002.

Dated: _________________, 2002 |_| Check Box if You Plan
to Attend Meeting

- ------------------------------- -----------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER

- ------------------------------- -----------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER

Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.

- --------------------------------------------------------------------------------
Please complete and date this proxy and return it
promptly in the enclosed postage-prepaid envelope.
- --------------------------------------------------------------------------------