UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2004

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-24187


HUDSON RIVER BANCORP, INC.
(Exact Name of Registrant as Specified in its Charter)

Delaware	14-1803212
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One Hudson City Centre, Hudson, New York	12534
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (518) 828-4600

Securities Registered Pursuant to Section 12(b) of the Act:

None

Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, par value $.01 per share
(Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicated by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). YES x NO o

The aggregate market value of the Registrant’s common stock held by non-affiliates as of September 30, 2003 was $468.4 million. As of June 1, 2004, there were issued and outstanding 30,365,944 shares of the Registrant’s Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

Part II of Form 10-K - Annual Report to Shareholders for the fiscal year ended March 31, 2004.

Part III of Form 10-K - Portions of Proxy Statement for 2004 Annual Meeting of Shareholders.

Explanatory Note:

The purpose of this amendment to the Annual Report on Form 10-K for the fiscal year ended March 31, 2004 of Hudson River Bancorp, Inc. is to correct the lack of electronic signatures within the certifications set forth at Exhibit 31.1, Exhibit 31.2, and Exhibit 32 to conform them with current SEC requirements.

HUDSON RIVER BANCORP, INC. AND SUBSIDIARIES

FORM 10-K

March 31, 2004

INDEX

		Page
PART I
Item 1	Business of the Company ..............................................................................................	2
Item 2	Properties ....................................................................................................................	18
Item 3	Legal Proceedings ........................................................................................................	18
Item 4	Submission of Matters to a Vote of Security Holders .....................................................	19

PART II
Item 5	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities .....................................................................................	19
Item 6	Selected Financial Data ................................................................................................	19
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 7A	Quantitative and Qualitative Disclosures about Market Risk ...........................................	19
Item 8	Financial Statements and Supplementary Data ...............................................................	19
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	20
Item 9A	Controls and Procedures ..............................................................................................	20

PART III
Item 10	Directors and Executive Officers of the Registrant .........................................................	21
Item 11	Executive Compensation ...............................................................................................	27
Item 12	Security Ownership of Certain Beneficial Owners and Management ...............................	36
Item 13	Certain Relationships and Related Transactions .............................................................	38
Item 14	Controls and Procedures ..............................................................................................	38

PART IV
Item 15	Exhibits, Financial Statement Schedules, and Reports on Form 8-K ...............................	39

	Signatures ....................................................................................................................	41

PART I

Item 1. Business

BUSINESS OF THE COMPANY

General

Hudson River Bancorp, Inc. (the “Company”), a Delaware corporation, was organized on March 5, 1998 at the direction of the Board of Directors of Hudson River Bank & Trust Company (the “Bank”) for the purpose of owning all of the outstanding capital stock of the Bank upon consummation of the Bank’s conversion from a mutual savings bank to a stock savings bank. The Company, as the sole stockholder of the Bank, is a savings and loan holding company regulated by the Office of Thrift Supervision (“OTS”).

The Company is an operating company. The Company directs, plans and coordinates the business activities of the Bank and also is actively involved in the plans and activities of its affiliates. In the future, the Company may continue to acquire or organize other operating subsidiaries, including other financial institutions, or it may merge with or acquire other financial institutions and financial services related companies. The Company neither owns nor leases any property but instead uses the premises and equipment of the Bank. The Company does not currently employ any persons other than certain officers of the Bank who are not separately compensated by the Company. The Company utilizes the support staff of the Bank from time to time, if needed.

Throughout this Annual Report on Form 10-K for the year ended March 31, 2004, references to the Company include both the Company and the Bank, unless otherwise noted. For additional information on the business of the Company, see page 6 of the Company’s Annual Report to Shareholders attached hereto as Exhibit 13 and incorporated herein by reference.

On April 1, 2004, the Company and First Niagara Financial Group, Inc. (“First Niagara”) entered into a definitive Merger Agreement under which the Company will merge into First Niagara. The Agreement provides that shareholders of the Company will receive either First Niagara stock, cash or a combination of First Niagara stock and cash for each share of Company common stock. The aggregate merger consideration is comprised of approximately 35.7 million shares of First Niagara common stock and approximately $125.0 million in cash. The actual value of the merger consideration to be paid upon closing will depend on the average stock price for First Niagara just prior to the completion of the merger. The mix of cash and stock received by each Hudson River stockholder will also be determined at that time to ensure that each share of Hudson River stock receives equal consideration. The Boards of Directors of the Company and First Niagara expect the transaction to close in January 2005 subject to the receipt of various shareholder and regulatory approvals.

Market Area

The Company's primary market area is comprised of 49 branches located in the Capital District area of New York State and consists principally of suburban and rural communities with service, wholesale/retail trade, government and manufacturing serving as the basis of the local economy. Service jobs represent the largest type of employment in the Company’s primary market area, with jobs in wholesale/retail trade accounting for the second largest employment sector.

Lending Activities

General. The Company primarily originates and retains fixed- and adjustable-rate residential mortgage loans, including home equity loans, secured by the borrower's primary residence. Generally, the term of the loans originated ranges from 15 to 30 years. The Company also originates commercial real estate loans and commercial loans, and to a lesser extent, manufactured housing loans, financed insurance premiums and other consumer loans. In-market loan originations are generated by the Company's marketing efforts, which include print, radio and television advertising, lobby displays and direct contact with local civic and religious organizations, as well as by the Company's present customers, walk-in customers and referrals from real estate agents, brokers and builders. The marketing for manufactured housing loans is conducted through Tammac Corporation with which the Company has an agreement relating to such loans. The marketing for financed insurance premiums is conducted through the Company’s premium finance subsidiary. See “Consumer Lending.” At March 31, 2004, the Company's total loan portfolio totaled approximately $1.7 billion.

The types of loans that the Company may originate are subject to federal and state laws and regulations. Interest rates charged by the Company on loans are affected by the demand for such loans, the supply of money available for lending purposes and the rates offered by competitors. These factors are in turn affected by, among other things, economic conditions, monetary policies of the Federal government, including the Federal Reserve Board (“FRB”), and tax policies. For a description of the Company’s lending portfolio, see page 10 of the Company’s 2004 Annual Report to Shareholders attached hereto as Exhibit 13 and incorporated herein by reference.

The following table illustrates the contractual maturity of the Company's construction, commercial real estate, and commercial loans at March 31, 2004. Loans which have adjustable or renegotiable interest rates are shown as maturing in the period during which the contract is due. The schedule does not include the effects of possible prepayments or enforcement of due-on-sale clauses.

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(In thousands)	Construction Loans	Commercial Real Estate Loans	Commercial Loans	Total

Amounts due:
1 year or less	$ -	$ 25,894	$ 67,302	$ 93,196

After 1 year:
1 to 5 years	-	119,285	31,488	150,773
Over 5 years	33,947	281,987	27,153	343,087
Total due after one year	33,947	401,272	58,641	493,860
Total amount due	$ 33,947	$ 427,166	$ 125,943	$ 587,056

The following table sets forth the dollar amounts in the respective loan category at March 31, 2004 that are contractually due after March 31, 2005, and whether such loans have fixed interest rates or adjustable interest rates.

	Due after March 31, 2005
(In thousands)	Fixed	Adjustable	Total
Construction loans	$ 33,697	$ 250	$ 33,947
Commercial real estate loans	138,963	262,309	401,272

Commercial loans	31,031	27,610	58,641

Total	$ 203,691	$ 290,169	$ 493,860

Residential Real Estate Lending

The Company's residential real estate loans consist of primarily one-to-four family, owner-occupied mortgage loans, including home equity loans. At March 31, 2004, $952.0 million, or 57.2% of the Company's total loans consisted of residential mortgage loans and home equity loans. The Company does not originate fixed-rate loans for terms longer than 30 years. The Company's residential real estate loans are priced competitively with the market. Accordingly, the Company attempts to distinguish itself from its competitors based on quality of service.

The Company generally underwrites its fixed-rate residential mortgage loans using accepted secondary market standards. In underwriting residential mortgage loans, the Company evaluates, among other things, the borrower's ability to make monthly payments and the value of the property securing the loan. Properties securing real estate loans made by the Company are appraised by independent fee appraisers approved by the Company's Board of Directors. The Company requires borrowers to obtain title insurance, and fire and property insurance (including flood insurance, if necessary) in an amount not less than the amount of the loan.

The Company currently offers adjustable-rate residential mortgage (“ARM”) loans with initial fixed rate periods from one to ten years. Subsequent to the initial fixed period the interest rate adjusts annually based on the change in the relevant United States Treasury index. These loans generally provide for up to a 2.0% periodic cap and a lifetime cap of 6.0% over the initial rate. As a consequence of using caps, the interest rates on these loans may not be as rate sensitive as the Company's cost of funds.

Generally, the Company does not originate residential mortgage loans where the ratio of the loan amount to the value of the property securing the loan (i.e., the "loan-to-value" ratio) exceeds 95%, although on occasion, the Company may lend up to 97% of the value of the property securing the loan. If the loan-to-value ratio exceeds 80%, the Company generally requires that the borrower obtain private mortgage insurance in amounts intended to reduce the Company's exposure to 80% or less of the lower of the appraised value or the purchase price of the property securing the loan.

The Company's home equity loans and lines of credit are secured by a lien on the borrower's residence and generally do not exceed $250,000. The Company generally uses the same underwriting standards for home equity loans as it uses for residential mortgage loans. Home equity loans are generally originated in amounts which, together with all prior liens on such residence, do not exceed 80% of the appraised value of the property securing the loan. The interest rates for home equity loans and lines of credit either float, at a stated margin, with the prime rate or have fixed interest rates. Home equity lines of credit require interest and principal payments on the outstanding balance for the term of the loan. The terms of the Company’s home equity lines of credit are generally five years to ten years, with a payback period ranging from five to twenty years.

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Commercial Real Estate Lending

The Company engages in commercial real estate lending secured primarily by apartment buildings, office buildings, motels, nursing homes and strip shopping centers located in the Company's primary market area. At March 31, 2004, the Company had $427.2 million of commercial real estate loans, representing 25.6% of the Company's total loan portfolio.

Commercial real estate loans have either fixed or adjustable rates and terms to maturity that do not exceed 25 years. The Company's current lending guidelines generally require that the property securing a loan generate net cash flows of at least 125% of debt service after the payment of all operating expenses, excluding depreciation, and the loan-to-value ratio not exceed 75% on loans secured by such properties. Adjustable rate commercial real estate loans provide for interest at a margin over a designated index, often a designated prime rate, with periodic adjustments, generally at frequencies of up to five years. In underwriting commercial real estate loans, the Company analyzes the financial condition of the borrower, the borrower's credit history, the reliability and predictability of the net income generated by the property securing the loan and the value of the property itself. The Company generally requires personal guarantees of the borrowers in addition to the security property as collateral for such loans. Appraisals on properties securing commercial real estate loans originated by the Company are performed by independent fee appraisers approved by the Board of Directors.

Commercial real estate loans generally present a higher level of risk than loans secured by one- to four-family residences. This greater risk is due to several factors, including the concentration of principal in a limited number of loans and borrowers, the effect of general economic conditions on income producing properties and the increased difficulty of evaluating and monitoring these types of loans. Furthermore, the repayment of loans secured by commercial real estate is typically dependent upon the successful operation of the related real estate project. If the cash flow from the project is reduced (for example, if leases are not obtained or renewed, or a bankruptcy court modifies a lease term, or a major tenant is unable to fulfill its lease obligations), the borrower's ability to repay the loan may be impaired and the value of the property may be reduced.

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Consumer Lending

The Company offers a variety of secured and unsecured consumer loans, including manufactured housing loans (loans secured by prefabricated or mobile homes which serve as the borrower’s dwelling), financed insurance premiums, lines of credit and loans secured by automobiles. Substantially all of the Company’s manufactured housing loans and financed insurance premium loans are originated outside the Company's primary market area. The balance of the Company’s consumer loans are originated within the Company’s market area.

The underwriting standards employed by the Company for consumer loans other than financed insurance premiums generally include a determination of the applicant's payment history on other debts and an assessment of ability to meet existing obligations and payments on the proposed loan. Although creditworthiness of the applicant is the primary consideration, the underwriting process also includes a comparison of the value of the collateral securing the loan, if any, in relation to the proposed loan amount. For information regarding underwriting of financed insurance premiums, see “- Financed Insurance Premiums.”

Manufactured Housing Loans. In order to facilitate its origination of manufactured housing lending, the Company is party to an agreement with Tammac Corporation (“Tammac”), pursuant to which Tammac solicits manufactured housing loan applications on behalf of the Company. Under the agreement, the Company may refuse to accept for any reason any application referred to it by Tammac. Tammac provides certain collection services to the Company, which include, for any loan that is more than 30 days past due, attempting to cause the borrower to pay delinquent installments and to bring his or her delinquent loan payments up to date. Tammac also provides repossession and liquidation services, at the direction of the Company, for certain delinquent loans. Tammac is paid a fixed percentage of the amount financed by the borrower and does not receive additional compensation for collection, repossession, or any other services provided to the Company. Substantially all of the manufactured housing loans originated by the Company have been referred to it by Tammac.

Manufactured housing loans represent the largest component of the Company's consumer loan portfolio. At March 31, 2004, the Company's portfolio of manufactured housing loans totaled $52.8 million, or 3.2% of its total loan portfolio, down from $60.6 million or 3.7% at March 31, 2003. The Company's manufactured housing loans are typically originated at a higher rate than residential first mortgage loans, and generally have terms of up to 20 years. Historically, the Company's manufactured housing loans have been made with both fixed and adjustable rates of interest. Currently, however, the Company originates only fixed-rate manufactured housing loans. The Company’s adjustable-rate manufactured housing loans typically have an interest rate of 4.0% above the one year United States Treasury index, adjusted annually, with a 2.0% maximum annual adjustment and a 16.0% interest rate cap. The initial interest rate represents the floor. Because the loan may be based on the cost of the manufactured housing as well as improvements and because manufactured housing may decline in value due to wear and tear following their initial sale, the value of the collateral securing a manufactured housing loan may be less than the loan balance. At the time of origination, inspections are made to substantiate current market values on all manufactured homes. The Company has purposely allowed the manufactured housing loan portfolio to decrease from its prior year balances as it attempts to de-emphasize this type of lending.

Financed Insurance Premiums. Another component of the Company’s consumer loan portfolio is financed insurance premiums. The Company conducts such lending through a general partnership known as Premium Payment Plan (“PPP”) in which Hudson City Associates, Inc., a wholly owned subsidiary of the Bank, holds a 65% ownership interest. The remaining 35% interest is held by F.G.O. Corporation, which is responsible for the marketing of PPP’s business. Hudson City Associates receives 65% of any profits but absorbs 100% of any losses of PPP. No profit distributions are made to F.G.O. Corporation until any past losses have been recouped. PPP is currently licensed to provide insurance premium financing in forty-two states, but does business primarily in New York, New Jersey and Pennsylvania. Management estimates that approximately 10% of premiums financed are for non-standard and sub-standard (assigned risk) personal automobile insurance and the remaining 90% are for various commercial lines of insurance. Interest rates charged on these loans are substantially higher than those charged on other types of loans. Terms on these loans are primarily for nine months.

The Company has experienced a relatively high level of delinquencies in its financed insurance premium portfolio resulting in higher charge-offs. The Company may continue to experience a high level of delinquencies and charge-offs in this class of loans due to the nature of this type of lending. The underwriting of these loans is generally not based upon the credit risk of the borrower. In the typical case, funds are advanced to the insurance company for the full amount of the premium upon receipt of a down payment from the insured. If the insured defaults on the loan, the Company sustains a loss to the extent the premium has been earned by (and is therefore unrecoverable from) the insurance company. The Company’s most significant exposure to loss occurs when the initial insurance premium quoted by an insurance broker, and used as the basis for the loan and the related down payment, is increased by the underwriting insurance company subsequent to making the loan. In these instances, if the borrower decides not to pay the increased premium amount, the Company is left with an insufficient down payment, relative to the increased premium, and little or no collateral in the way of insurance premiums refundable by the insurance company. Accordingly, writing financed insurance premiums through insurance brokers who accurately quote the initial insurance premium is critical to this type of lending. At March 31, 2004, the Company had $47.8 million of financed insurance premiums through PPP, representing 2.9% of the Company’s total loan portfolio.

Consumer loans may entail greater credit risk than residential mortgage loans, particularly in the case of consumer loans which are unsecured or are secured by assets which may decline in value. In such cases, any repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance as a result of high initial loan-to-value ratios, repossession, rehabilitation and carrying costs, and the greater likelihood of damage, loss or depreciation of the property, and thus are more likely to be affected by adverse personal circumstances. In the case of manufactured home loans, which may have loan balances in excess of the resale value of the collateral, borrowers may abandon the collateral property making repossession by the Company and subsequent losses more likely. The application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount which can be recovered on consumer loans, including manufactured home loans.

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Commercial Lending

At March 31, 2004, commercial loans comprised $125.9 million, or 7.5% of the Company's total loan portfolio. Most of the Company's commercial loans have been extended to finance local businesses and include primarily short-term loans to finance machinery and equipment purchases, inventory, and accounts receivable. Commercial loans also involve the extension of revolving credit for a combination of equipment acquisitions and working capital needs, as well as mortgage warehouse lines of credit.

The terms of loans extended on machinery and equipment are based on the projected useful life of such machinery and equipment, generally not to exceed seven years. Lines of credit are available to borrowers and structured, dependent on the type of industry and required need, with either a 30 day clean-up requirement (i.e., the credit line has a zero balance), a formula based advance requirement and/or a minimum annual review and renewal process. All lines of credit are reviewed on an annual basis. In the event the borrower does not meet the approval requirements, the line of credit may be terminated and the outstanding balance may be converted into a fixed term loan. The Company has standby letters of credit outstanding which are offered at competitive rates and terms and are generally on a secured basis.

Unlike residential mortgage loans, commercial loans are typically made on the basis of the borrower's ability to make repayment from the cash flow of the borrower's business. As a result, the availability of funds for the repayment of commercial loans may be substantially dependent on the success of the business itself (which, in turn, is often dependent in part upon general economic conditions). The Company's commercial loans are usually, but not always, secured by business assets. However, the collateral securing the loans may depreciate over time, may be difficult to appraise and may fluctuate in value based on the success of the business.

The Company's commercial lending policy includes credit file documentation and analysis of the borrower's background, capacity to repay the loan, the adequacy of the borrower's capital and collateral as well as an evaluation of other conditions affecting the borrower. Analysis of the borrower's past, present and future cash flows is also an important aspect of the Company's current credit analysis. The Company generally obtains personal guarantees on its commercial loans. Nonetheless, such loans are believed to carry higher credit risk than real estate based lending.

The Company maintains a $25.0 million warehouse line of credit with Homestead Funding Corp. (“Homestead”), a mortgage company located in the Capital District area of New York. Homestead primarily originates residential real estate loans in the Company’s market area. The line of credit is secured by assignments of the underlying mortgages. At March 31, 2004, the Company had $11.4 million outstanding under this warehouse line of credit which is included in commercial loans. The Company also has an equity investment in Homestead. The line of credit to Homestead was made in the ordinary course of business at the Company’s normal credit terms, including interest rate and collateralization.

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Asset Quality

Delinquency Procedures. When a borrower fails to make a required payment on a residential mortgage loan, the Company attempts to cure the deficiency by contacting the borrower. If the delinquency has not been cured within a reasonable period of time, foreclosure procedures may be commenced. If foreclosed, property collateralizing the loan is sold at a public sale and may be purchased by the Company. If the Company is in fact the successful bidder at the foreclosure sale, upon receipt of a deed to the property, the Company generally sells the property at the earliest possible date.

Collection efforts on consumer and commercial real estate loans are similar to efforts on residential mortgage loans. In the case of manufactured home loans, the Company’s agreement with Tammac requires Tammac to provide collection services on any loan that is more than 30 days past due. The Company also maintains periodic contact with commercial loan customers and monitors and reviews the borrowers’ financial statements and compliance with debt covenants on a regular basis.

Real estate and other assets acquired by the Company as a result of foreclosure or by deed-in-lieu of foreclosure or repossession are classified as Other Real Estate Owned (“OREO”) and Repossessed Property until sold. When property is classified as OREO and Repossessed Property, it is recorded at the lower of the recorded investment in the loan or fair value (net of disposition costs) at that date and any writedown resulting therefrom is charged to the allowance for loan losses. Subsequent writedowns are charged to operating expenses. Net expenses from OREO and repossessed properties are expensed as incurred. See the “Nonperforming Assets” table on page 13 of the Company’s 2004 Annual Report to Shareholders attached hereto as Exhibit 13 and incorporated herein by reference.

Other Loans of Concern. As of March 31, 2004, there were $28.5 million of primarily commercial and commercial real estate loans not included in the category of nonperforming loans where known information about the possible credit or other problems of borrowers caused management to have doubts as to the ability of the borrower to comply with present loan repayment terms. These loans have been considered by management in conjunction with the analysis of the adequacy of the allowance for loan losses.

Allowance for Loan Losses. At March 31, 2004, the Company had a total allowance for loan losses of $40.3 million, representing 2.42% of total loans and 210.89% of total nonperforming loans. See the “Loan Loss Experience” table on page 14 of the Company’s 2004 Annual Report to Shareholders attached hereto as Exhibit 13 and incorporated herein by reference.

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Allocation of the Allowance for Loan Losses

The following table sets forth the allocation of the allowance for loan losses by category as prepared by the Company. This allocation is based on management's assessment as of a given point in time of the risk characteristics of each of the component parts of the total loan portfolio and is subject to changes as and when the risk factors of each such component part change. The allocation is not indicative of either the specific amounts or the loan categories in which future charge-offs may be taken, nor should it be taken as an indicator of future loss trends. The allocation of the allowance to each category does not restrict the use of the allowance to absorb losses in any category.

					At March 31,
	2004		2003		2002		2001		2000
(Dollars in thousands)	Allowance For Loan Losses	Percent Of Loans In Each Category To Total Loans	Allowance For Loan Losses	Percent Of Loans In Each Category To Total Loans	Allowance For Loan Losses	Percent Of Loans In Each Category To Total Loans	Allowance For Loan Losses	Percent Of Loans In Each Category To Total Loans	Allowance For Loan Losses	Percent Of Loans In Each Category To Total Loans

Allocation of allowance for loan losses:
Residential real estate (1)	$ 11,392	59.2%	$ 11,254	60.1%	$ 11,316	64.2%	$ 5,937	59.5%	$ 5,015	60.8%
Commercial real estate	15,608	25.6	14,785	24.9	13,677	22.6	5,435	19.0	4,154	16.9
Manufactured housing loans	3,371	3.2	3,809	3.7	4,190	3.6	4,647	8.6	3,281	9.9
Commercial loans	4,156	7.5	3,882	6.8	3,320	5.7	1,707	6.9	811	4.5
Financed insurance premiums	3,403	2.9	2,523	2.5	2,480	1.6	1,733	4.3	2,263	6.3
Consumer loans	710	1.3	1,204	1.8	1,518	2.0	590	2.0	354	1.9
Unearned discount, net deferred loan origination fees and costs, and purchase accounting adjustments	--	0.3	--	0.2	--	0.3	--	(0.3)	--	(0.3)
Unallocated	1,612	-	819	-	71	-	2,276	-	3,730	-
Total	$ 40,252	100.0%	$ 38,276	100.0%	$ 36,572	100.0%	$ 22,325	100.0%	$ 19,608	100.0%

(1) Includes home equity and construction loans.

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Investment Activities

The Company is authorized to invest in various types of liquid assets, including United States Treasury obligations, securities of various federal agencies, certain certificates of deposit of insured banks and savings institutions, certain bankers' acceptances, repurchase agreements and federal funds. Subject to various restrictions, the Company may also invest its assets in investment grade commercial paper, mortgage-backed securities, collateralized mortgage obligations (CMO’s), corporate debt securities and mutual funds whose assets conform to the investments that the Company is otherwise authorized to make directly. As of March 31, 2004, the Company did not hold any securities to one issuer which exceeded 10% of shareholders’ equity, excluding securities issued by U.S. Government agencies. As of March 31, 2004, all of the Company’s securities are “available for sale”.

Generally, the investment policy of the Company is to invest funds among various categories of investments and maturities based upon the Company's need for liquidity, to fulfill the Company's asset/liability management policies to achieve the proper balance between its desire to minimize risk and maximize yield, and, to a much lesser extent, to provide collateral for borrowings. See Note 3 of the Notes to Consolidated Financial Statements included in the Company’s 2004 Annual Report to Shareholders incorporated herein by reference as Exhibit 13.

The following table sets forth information regarding the scheduled maturities, amortized cost, and weighted-average yields for the Company's securities portfolio at March 31, 2004 by contractual maturity. The table does not take into consideration the effects of scheduled repayments or possible prepayments. Equity securities, which have no stated maturity, are shown as maturing in the “Over 10 years” category in the table below.

(Dollars in thousands)

Less than 1 year

1 to 5 years

5 to 10 years

Over 10 years

Total Securities

Amount

Yield*

Amount

Yield*

Amount

Yield*

Amount

Yield*

Amount

Yield*

Fair

Value

Securities Available for Sale:

U.S. Government and

Agency securities

$ 6,043

2.22%

$95,893

2.87%

$ --

--%

$ --

--%

$101,936

2.83%

$102,158

Corporate debt securities

13,070

5.55

10,085

5.99

29,958

4.47

53,113

5.02

56,126

Tax-exempt securities

9,348

1.31

5,397

1.86

13,888

5.11

28,633

3.26

29,802

Collateralized mortgage

obligations

1,156

1.24

13,585

1.51

236,053

3.26

250,794

3.16

252,077

Asset-backed securities

135,070

3.97

135,070

3.97

137,255

Mortgage-backed

securities

8.25

149

7.63

24,665

3.91

34,595

3.81

59,412

3.87

59,780

Equity securities

12,116

3.42

12,116

3.42

12,504

Other securities

822

1.82

822

1.82

822

Total Securities Available

for Sale

$ 29,286

3.41%

$112,680

3.09%

$ 38,250

3.06%

$461,680

3.65%

$641,896

3.51%

$650,524

* Yields are based upon the amortized cost of securities.

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Sources of Funds

General. The Company's primary sources of funds are deposits, loan interest and principal payments, sales, maturities, prepayments and calls of securities, short-term investments, and funds provided from operations and borrowings.

Deposits. The Company offers a variety of deposit accounts having a range of interest rates and terms. The Company's deposits consist of passbook and statement savings accounts, money market and N.O.W accounts, and time deposits generally ranging in terms from three months to five years. The Company only solicits deposits from its primary market area and does not have brokered deposits. The Company relies primarily on competitive pricing policies, advertising and customer service to attract and retain these deposits. At March 31, 2004, the Company's deposits totaled $1.8 billion, of which $1.6 billion were interest-bearing deposits.

The flow of deposits is influenced significantly by general economic conditions, changes in money market and prevailing interest rates, and competition. The variety of deposit products offered by the Company has allowed it to be competitive in obtaining funds and to respond with flexibility to changes in consumer demand. The Company has become more susceptible to short‑term fluctuations in deposit flows, as customers have become more interest rate conscious. The Company manages the pricing of its deposits in keeping with its asset/liability management, liquidity and profitability objectives. Based on its experience, the Company believes that its passbook and statement savings, money market accounts and N.O.W accounts are relatively stable sources of deposits. However, the ability of the Company to attract and maintain time deposits and the rates paid on these deposits has been and will continue to be significantly affected by market conditions.

The following table indicates, as of March 31, 2004, the amount of the Company's time deposits of $100,000 or more by time remaining until maturity.

	Maturity

(In thousands)	3 Months or Less		3 to 6 Months		6 to 12 Months		Over 12 Months		Total

Time deposits of $100,000 or more	$ 16,882	$ 17,037		$ 15,741		$ 36,318		$ 85,978

The Company obtains time deposits of $100,000 or more in the ordinary course of business, generally from customers with other loan or deposit relationships with the Company. The Company does not actively market or aggressively price these deposits. Rates offered by the Company on these deposits do not differ significantly from rates offered on time deposits less than $100,000. Generally rates are offered which reflect the overall customer relationship, not just the balance of time deposits. At March 31, 2004, time deposits of $100,000 or more represented 14.1% of total time deposits, down slightly from 14.3% at March 31, 2003. The total amount of time deposits of $100,000 or more is not considered by management to be a significant source of funding for the Company. Further, management does not view these deposits to be any more or less significant than all time deposits take as a whole when assessing its liquidity and interest rate risk positions.

Borrowings. Although deposits are the Company's primary source of funds, the Company's practice has been to utilize borrowings when they are a less costly source of funds, can be invested at a positive interest rate spread or when the Company needs additional funds to satisfy loan demand.

The Company's borrowings historically have consisted principally of short-term advances and long-term borrowings from the FHLB of New York. Such advances and borrowings can be made pursuant to several different credit programs, each of which has its own interest rate and range of maturities. The Company currently maintains available lines of credit and is currently authorized to borrow up to $100.0 million on overnight lines of credit with the FHLB of New York. At March 31, 2004, the Company had outstanding $458.4 million of long-term borrowings from the FHLB of New York and no short-term advances. See Note 8 of the Notes to Consolidated Financial Statements included in the Company’s 2004 Annual Report to Shareholders incorporated herein by reference as Exhibit 13. The Company may increase its borrowings in order to fund the acquisition of additional securities or other assets in the future or as part of merger and acquisition activities.

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Contractual Obligations

The Company is contractually obligated to make the following payments on long-term debt and leases as of March 31, 2004:

	Payments due by Period

(In thousands)	Less than 1 Year		1 to 3 Years		3 to 5 Years		More than 5 Years		Total

Federal Home Loan Bank borrowings	$117,984	$159,338		$ 78,659		$102,468		$458,449
Operating leases	950	1,489		1,168		4,953		8,560
Total	$118,934	$160,827		$ 79,827		$107,421		$467,009

Subsidiary Activities

Hudson City Associates, Inc. Hudson City Associates, Inc. (“HCAI”), a wholly owned subsidiary of the Bank, was incorporated in 1984 but remained inactive until 1990. In 1990, HCAI formed a partnership known as Premium Payment Plan (referred to herein as “PPP”), pursuant to which the Company provides premium financing for both certain lines of commercial insurance and non-standard and sub-standard personal automobile insurance.

Hudson City Centre, Inc. A wholly owned subsidiary of the Bank, Hudson City Centre, Inc. (“HCCI”), was organized in 1985 to facilitate the construction of the Bank’s main office building. During 2002, additional properties owned by the Company were transferred to this subsidiary to facilitate management of the properties.

Hudson River Mortgage Corporation. A wholly owned subsidiary of the Company, Hudson River Mortgage Corporation (“HRMC”) was organized in 1996 to broker mortgages to the Company and other financial institutions.

Hudson River Funding Corp. Hudson River Funding Corp. ("HRFC") is a Real Estate Investment Trust formed in 1997 to enhance liquidity, portfolio yields and capital growth. HRFC holds earning assets consisting of residential mortgage loans, commercial real estate loans, home equity loans, and home improvement loans. Interest income earned on the assets held by HRFC, less expenses, is distributed to the Bank in the form of dividends.

C. W. Bostwick, Inc. C. W. Bostwick, Inc. (“Bostwick”) is a full-service insurance agency which provides access to more than 25 major carriers of personal, group and commercial insurance who offer insurance for life, home, property, personal liability, long-term care, disability and annuities for retirement to our customer base. The Company made an equity investment in Bostwick in September 1999. In January 2001, the Company exercised its option to acquire additional equity in Bostwick, and consequently, the Company became the majority shareholder of Bostwick and Bostwick became a consolidated subsidiary of the Company.

Hudson River Financial Management, Inc. Hudson River Financial Management, Inc. (“HRFS”) is a wholly-owned brokerage subsidiary of Hudson River Bank & Trust Company. It was acquired in April 2001 as a result of the acquisition of Cohoes Bancorp, Inc., parent company of Cohoes Savings Bank.

HRBT Services Corp. HRBT Services Corp. is a title insurance company which was incorporated in April 2001 and is a wholly owned subsidiary of Hudson River Bank & Trust Company.

Hudson River Commercial Bank. The Company established a commercial bank subsidiary, Hudson River Commercial Bank (“HRCB”), which began accepting municipal deposits in November 2002. HRCB is a subsidiary of the Bank.

Competition

The Company faces strong competition, both in originating real estate and other loans and in attracting deposits. Competition in originating real estate loans comes primarily from other savings institutions, commercial banks, credit unions and mortgage bankers making loans secured by real estate located in the Company's primary market area. Other savings institutions, commercial banks, credit unions, and finance companies provide vigorous competition in consumer and commercial lending. The Company also faces strong competition in its efforts to provide insurance premium financing through PPP from a variety of other lenders, some of which have much greater assets and resources than the Company.

The Company attracts all of its deposits through its branch offices, primarily from the communities in which those branch offices are located; therefore, competition for those deposits is principally from mutual funds, annuities, stocks, bonds, and other securities and other savings institutions, commercial banks and credit unions located in the same communities. The Company competes for these deposits by offering a variety of deposit accounts at competitive rates, convenient business hours, and convenient branch locations with interbranch deposit and withdrawal privileges. Automated teller machine facilities are also available.

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Employees

At March 31, 2004, the Company had 664 full-time equivalent employees. The Company's employees are not represented by any collective bargaining group. Management considers its employee relations to be good.

Website Information

The Company makes available on its website: www.hudsonriverbank.com, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to these reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.

REGULATION

Set forth below is a brief description of the laws and regulations applicable to the Company and the Bank. The description of the laws and regulations hereunder, as well as descriptions of laws and regulations contained elsewhere herein, does not purport to be complete and is qualified in its entirety by reference to applicable laws and regulations. Legislation is introduced from to time in the United States Congress that may affect the operations of the Company and the Bank. In addition, the regulations by which the Company and the Bank are governed may be amended from time to time. Any such legislative or regulatory changes could adversely affect the Bank or the Company. No assurance can be made as to whether or in what form any such changes will occur.

The Company

General. The Company is subject to regulation as a savings and loan holding company under the Home Owners’ Loan Act, as amended (“HOLA”), instead of being subject to regulation as a bank holding company under the Bank Holding Company Act of 1956, because the Bank has made an election under Section 10(l) of HOLA to be treated as a “savings association” for purposes of Section 10(e) of HOLA. As a result, the Company has registered with the OTS and is subject to OTS regulations, examinations, supervision and reporting requirements relating to savings and loan holding companies. The Company is also required to file certain reports with, and otherwise comply with the rules and regulations of, the New York State Banking Board (the "NYBB") and the Securities and Exchange Commission (“SEC”). As a subsidiary of a savings and loan holding company, the Bank is subject to certain restrictions in its dealings with the Company and other Bank affiliates.

Activities Restrictions. The Bank is presently the sole savings association subsidiary of the Company. There are generally no restrictions on the activities of a savings and loan holding company which has held only one subsidiary savings association since before May 4, 1999. If the savings association subsidiary of such a holding company fails to meet the qualified thrift lender ("QTL") test, then the Company’s activities are restricted to those permissible for a multiple savings and loan holding company or a financial holding company. Unless the savings association requalifies as a QTL within one year thereafter, it shall register as, and become subject to the restrictions applicable to, a bank holding company.

Qualified Thrift Lender Test. A savings association can comply with the QTL test by either meeting the QTL test set forth in the HOLA and or qualifying as a domestic building and loan association as defined in Section 7701(a)(19) of the Internal Revenue Code of 1986, as amended.

The QTL test set forth in the HOLA requires that qualified thrift investments ("QTLs") represent 65% of portfolio assets of the savings institution and its consolidated subsidiaries. Portfolio assets are defined as total assets less intangibles, property used by a savings association in its business and liquidity investments in an amount not exceeding 20% of assets. Generally, QTLs are residential housing related assets. Small business loans, credit card loans, student loans and loans for personal, family and household purposes may be included without limitation as qualified investments. At March 31, 2004, the Bank’s assets invested in QTLs were in excess of the percentage required to qualify the Bank under the QTL test in effect at that time.

Limitations on Transactions with Affiliates. Transactions between FDIC insured institutions and their affiliates are governed by Sections 23A and 23B of the Federal Reserve Act. An affiliate of a FDIC insured institution is any company or entity which controls, is controlled by or is under common control with the FDIC insured institution. The parent company of a insured FDIC institution (such as the Company) and any companies which are controlled by such parent company are affiliates of the insured FDIC institution. Generally, Sections 23A and 23B (i) limit the extent to which the savings institution or its subsidiaries may engage in "covered transactions" with any one affiliate up to an amount equal to 10% of such institution's capital stock and surplus, and its covered transactions with all affiliates in the aggregate amount up to an amount equal to 20% of such capital stock and surplus and (ii) require that all such transactions be on terms substantially the same, or, at least as favorable, to the institution as those provided to a non-affiliate. The term “covered transaction” includes the making of loans, purchase of assets, issuance of a guarantee and other similar transactions.

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Restrictions on Acquisitions. The Company may not acquire control of another savings association unless the OTS approves. The Company may not by acquired by a company, other than a bank holding company, unless the OTS approves, or by an individual unless the OTS does not object after receiving notice. The Company may not be acquired by a bank holding company unless the Board of Governors of the Federal Reserve System (the “Federal Reserve”) approves. In any case, the public must have an opportunity to comment on the proposed acquisition, and the OTS or Federal Reserve must complete an application review. Without prior approval from the OTS, the Company may not acquire more than 5% of the voting stock of any savings association that is not one of its subsidiaries.

The Gramm-Leach-Bliley Act generally restricts any non-financial entity from acquiring the Company unless such non-financial entity was, or had submitted an application to become, a savings and loan holding company as of May 4, 1999. Since the Company was treated as a unitary savings and loan holding company prior to that date, the Company may engage in non-financial activities and acquire non-financial subsidiaries.

The Bank

General. The Bank is subject to extensive regulation and examination by the New York State Banking Department (“NYSBD”), as its chartering authority, and by the Federal Deposit Insurance Corporation (“FDIC”), as the insurer of its deposits and is subject to certain requirements established by the OTS as a result of the Company's savings and loan holding company status. The federal and state laws and regulations which are applicable to banks and their holding companies regulate, among other things, the scope of their business, their investments, their reserves against deposits, the timing of the availability of deposited funds and the nature and amount of and collateral for certain loans. The Bank must file reports with the NYSBD and the FDIC concerning its activities and financial condition, in addition to obtaining regulatory approvals prior to entering into certain transactions such as establishing branches and mergers with, or acquisitions of, other depository institutions. There are periodic examinations by the NYSBD and the FDIC to test the Bank's compliance with various regulatory requirements. This regulation and supervision establishes a comprehensive framework of activities in which an institution can engage and is intended primarily for the protection of the insurance fund and depositors. The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes. Any change in such regulation, whether by the NYSBD, the FDIC or as a result of the enactment of legislation, could have a material adverse impact on the Company, the Bank and their operations.

Capital Requirements. The FDIC has promulgated regulations and adopted a statement of policy regarding the capital adequacy of state-chartered banks, which, like the Bank, are not members (“non-members”) of the Federal Reserve System. See Note 9 of the Notes to Consolidated Financial Statements included in the Company’s 2004 Annual Report to Shareholders incorporated herein by reference as Exhibit 13.

Activities and Investments of New York-Chartered Savings Banks. The Bank derives its lending, investment and other authority primarily from the applicable provisions of New York State Banking Law and regulations, as limited by FDIC regulations and other federal laws and regulations. The New York laws and regulations authorize savings banks, including the Bank, to invest in real estate mortgages, consumer and commercial loans, certain types of debt securities, including certain corporate debt securities and obligations of federal, State and local governments and agencies, certain types of corporate equity securities up to specified limits and certain other assets. The lending powers of a New York chartered stock bank like this bank are not subject to percentage of asset limitations, although there are limits applicable to single borrowers. A savings bank may also, pursuant to the "leeway" authority, make investments not otherwise permitted under the New York State Banking Law. This authority permits investments in otherwise impermissible investments of up to 1% of the savings bank's assets in any single investment, subject to certain restrictions and to an aggregate limit for all such investments of up to 5% of assets. Additionally, in lieu of investing in such securities in accordance with the reliance upon the specific investment authority set forth in the New York State Banking Law, savings banks are authorized to elect to invest under a "prudent person" standard in a wider range of debt and equity securities as compared to the types of investments permissible under such specific investment authority. However, in the event a savings bank elects to utilize the "prudent person" standard, it will be unable to avail itself of the other provisions of the New York State Banking Law and regulations which set forth specific investment authority. A New York chartered stock savings bank may also exercise trust powers upon approval of the NYSBD.

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New York-chartered savings banks may invest in operating subsidiaries, which may engage in the same activities at the same locations as the parent bank. New York-chartered savings banks may also invest in subsidiaries under their service corporation investment power. A savings bank may use this power to invest in corporations that engage in various activities authorized for savings banks, plus any additional activities authorized by the NYBB. Investment by a savings bank in the stock, capital notes and debentures of its service corporations is limited to 3% of the bank's assets, and such investments, together with the bank’s loans to its service corporations, may not exceed 10% of the savings bank's assets.

With certain limited exceptions, a New York-chartered savings bank may not make loans or extend credit to a single borrower, the aggregate amount of which would be in excess of 15% of the bank's equity. The Bank currently complies with all applicable loans-to-one-borrower limitations.

Activities and Investments of FDIC-Insured State-Chartered Banks. The activities and equity investments of FDIC-insured, state-chartered banks are generally limited to those that are permissible for national banks. Under regulations dealing with equity investments, an insured state bank generally may not directly or indirectly acquire or retain any equity investment of a type, or in an amount, that is not permissible for a national bank. In addition, an FDIC-insured state-chartered bank may not directly, or indirectly through a subsidiary, engage as "principal" in any activity that is not permissible for a national bank unless the FDIC has determined that such activities would pose no risk to the insurance fund of which it is a member and the bank is in compliance with applicable regulatory capital requirements.

Regulatory Enforcement Authority. Applicable banking laws include substantial enforcement powers available to federal banking regulators. This enforcement authority includes, among other things, the ability to assess civil money penalties, to issue cease-and-desist or removal orders and to initiate injunctive actions against banking organizations and institution-affiliated parties, as defined. In general, these enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices. Other actions or inactions may provide the basis for enforcement action, including misleading or untimely reports filed with regulatory authorities.

Under the New York State Banking Law, the Department may issue an order to a New York-chartered banking institution to appear and explain an apparent violation of law, to discontinue unauthorized or unsafe practices and to keep prescribed books and accounts. Upon a finding by the Department that any director or officer of any banking organization has violated any law, or has continued unauthorized or unsafe practices in conducting the business of the banking organization after having been notified by the Department to discontinue such practices, such director, or officer may be removed from office by the Department after notice and an opportunity to be heard. The Bank does not know of any past or current practice, condition or violation that might lead to any proceeding by the Department against the Bank or any of its directors or officers. The Department also may take possession of a banking organization under specified statutory criteria.

Prompt Corrective Action. Section 38 of the Federal Deposit Improvement Act provides the federal banking regulators with broad power to take "prompt corrective action" to resolve the problems of undercapitalized institutions. The extent of the regulators' powers depends on whether the institution in question is "well-capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized" or "critically undercapitalized." Under regulations adopted by the federal banking regulators, an institution shall be deemed to be (i) "well-capitalized" if it has total risk-based capital ratio of 10.0% or more, has a Tier I risk-based capital ratio of 6.0% or more, has a Tier I leverage capital ratio of 5.0% or more and is not subject to specified requirements to meet and maintain a specific capital level for any capital measure, (ii) "adequately capitalized" if it has a total risk-based capital ratio of 8.0% or more, a Tier I risk-based capital ratio of 4.0% or more and a Tier I leverage capital ratio of 4.0% or more (3.0% under certain circumstances) and does not meet the definition of "well-capitalized," (iii) "undercapitalized" if it has a total risk-based capital ratio that is less than 8.0%, a Tier I risk-based capital ratio that is less than 4.0% or a Tier I leverage capital ratio that is less than 4.0% (3.0% under certain circumstances), (iv) "significantly undercapitalized" if it has a total risk-based capital ratio that is less than 6.0%, a Tier I risk-based capital ratio that is less than 3.0% or a Tier I leverage capital ratio that is less than 3.0%, and (v) "critically undercapitalized" if it has a ratio of tangible equity to total assets that is equal to or less than 2.0%. The regulations also provide that a federal banking regulator may, after notice and an opportunity for a hearing, reclassify a "well-capitalized" institution as "adequately capitalized" and may require an "adequately capitalized" institution or an "undercapitalized" institution to comply with supervisory actions as if it were in the next lower category if the institution is in an unsafe or unsound condition or engaging in an unsafe or unsound practice. The federal banking regulator may not, however, reclassify a "significantly undercapitalized" institution as "critically undercapitalized."

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An institution generally must file a written capital restoration plan which meets specified requirements, as well as a performance guaranty by each company that controls the institution, with its appropriate federal banking regulator within 45 days of the date that the institution receives notice or is deemed to have notice that it is "undercapitalized," "significantly undercapitalized" or "critically undercapitalized.” Immediately upon becoming undercapitalized, an institution becomes subject to statutory provisions which, among other things, set forth various mandatory and discretionary restrictions on the operations of such an institution.

At March 31, 2004, the Bank had capital levels which qualified it as a "well-capitalized" institution.

FDIC Insurance Premiums. The Bank is a member of the Bank Insurance Fund (“BIF”) administered by the FDIC but has accounts insured by both the BIF and the Savings Association Insurance Fund (“SAIF”). The SAIF-insured accounts are held by the Bank as a result of certain acquisitions and branch purchases. As insurer, the FDIC is authorized to conduct examinations of, and to require reporting by, FDIC-insured institutions. It also may prohibit any FDIC-insured institution from engaging in any activity the FDIC determines by regulation or order to pose a serious threat to the insurance funds.

Community Investment and Consumer Protection Laws. In connection with its lending activities, the Bank is subject to a variety of federal laws designed to protect borrowers and promote lending to various sectors of the economy and population. Included among these are the federal Home Mortgage Disclosure Act, Real Estate Settlement Procedures Act, Truth-in-Lending Act, Equal Credit Opportunity Act, Fair Credit Reporting Act and Community Reinvestment Act (“CRA”).

The CRA requires insured institutions to define the communities that they serve, identify the credit needs of those communities and help meet the credit needs of the community. The responsible federal banking regulator (in the case of the Bank, the FDIC) must conduct regular CRA examinations of insured financial institutions and assign to them a CRA rating of "outstanding," "satisfactory," "needs improvement" or "unsatisfactory." The Bank's current CRA rating is "satisfactory." CRA ratings are taken into account when federal banking regulators review certain applications.

The Bank is also subject to provisions of the New York State Banking Law which impose continuing and affirmative obligations upon banking institutions organized in New York State to serve the credit needs of its local community ("NYCRA"), which are similar to those imposed by the CRA. Pursuant to the NYCRA, a bank must file an annual NYCRA report and copies of all federal CRA reports with the NYSBD. The NYCRA requires the NYSBD to make an annual written assessment of a bank's compliance with the NYCRA, utilizing a four-tiered rating system, and make such assessment available to the public. The NYCRA also requires the NYSBD to consider a bank's NYCRA rating when reviewing a bank's application to engage in certain transactions. The Bank's latest NYCRA rating received from the NYSBD was "satisfactory."

Limitations on Dividends. The Company is a legal entity separate and distinct from the Bank. The Company's principal source of revenue consists of dividends from the Bank. The payment of dividends by the Bank is subject to various regulatory requirements.

Under New York State Banking Law and OTS regulations, a New York-chartered stock savings bank may declare and pay dividends out of its net profits, unless there is an impairment of capital, but approval of the Department is required if the total of all dividends declared in a calendar year would exceed the total of its net profits for that year combined with its retained net profits of the preceding two years, subject to certain adjustments.

Federal Home Loan Bank (“FHLB”) System. The Bank is a member of the FHLB of New York, which is one of 12 regional FHLBs that assist the home financing credit function of savings institutions. Each FHLB serves as a reserve or central bank for its members within its assigned region. It is funded primarily from proceeds derived from the sale of consolidated obligations of the FHLB System. It makes loans to members (i.e., advances) in accordance with policies and procedures established by the Board of Directors of the FHLB. The Bank had $458.4 million of FHLB long-term borrowings at March 31, 2004.

As an FHLB member, the Bank is required to purchase and maintain stock in the FHLB of New York in an amount equal to at least 1% of its aggregate unpaid residential mortgage loans, home purchase contracts or similar obligations at the beginning of each year or 5% of its advances from the FHLB of New York, whichever is greater. At March 31, 2004, the Bank had approximately $22.9 million in FHLB stock, which resulted in its compliance with this requirement.

The FHLBs are required to provide funds for the resolution of troubled savings institutions and to contribute to affordable housing programs through direct loans or interest subsidies on advances targeted for community investment and low- and moderate-income housing projects. These contributions have adversely affected the level of FHLB dividends paid in the past and could continue to do so in the future. These contributions also could have an adverse effect on the value of FHLB stock in the future.

Federal Reserve System. The FRB requires all depository institutions to maintain reserves against their transaction accounts (primarily checking accounts, including N.O.W. and Super N.O.W. accounts) and non-personal time deposits. As of March 31, 2004, the Company was in compliance with applicable requirements. However, because required reserves must be maintained in the form of vault cash or a noninterest-bearing account at a Federal Reserve Bank, the effect of this reserve requirement is to reduce an institution's earning assets.

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Recent Legislation

Under the Gramm-Leach-Bliley Act of 1999 (“GLB Act”), all financial institutions, including the Company and the Bank, are required to adopt privacy policies, restrict the sharing of nonpublic customer data with nonaffiliated parties at the customer’s request, and establish procedures and practices to protect customer data from unauthorized access.

Under Title III of the USA PATRIOT Act, also known as the International Money Laundering Abatement and Anti-Terrorism Financing Act of 2001, all financial institutions, including the Company and the Bank, are required in general to identify their customers, adopt formal and comprehensive anti-money laundering programs, scrutinize or prohibit altogether certain transactions of special concern, and be prepared to respond to inquiries from U.S. law enforcement agencies concerning their customers and their transactions. Additional information-sharing among financial institutions, regulators, and law enforcement authorities is encouraged by the presence of an exemption from the privacy provisions of the GLB Act for financial institutions that comply with this provision and the authorization of the Secretary of the Treasury to adopt rules to further encourage cooperation and information-sharing. The effectiveness of a financial institution in combating money laundering activities is a factor to be considered in any application submitted by a financial institution.

The Sarbanes-Oxley Act, signed into law July 30, 2002, addresses, among other issues, corporate governance, auditor independence and accounting standards, executive compensation, insider loans, whistleblower protection, and enhanced and timely disclosure of corporate information. The SEC has adopted various implementing rules, and the NASD has adopted corporate governance rules that have been approved by the SEC. The changes are intended to allow stockholders to monitor more effectively the performance of companies and management.

Effective August 29, 2002, as directed by section 302(a) of the Sarbanes-Oxley Act, the Company’s chief executive officer and chief financial officer are each required to certify that the Company’s quarterly and annual reports do not contain any untrue statement of a material fact. This requirement has several parts, including certification that these officers are responsible for establishing, maintaining and regularly evaluating the effectiveness of the Company’s internal controls; that they have made certain disclosures to the Company’s auditors and audit committee of the board of directors about the Company’s internal controls; and that they have included information in the Company’s quarterly and annual reports about their evaluation and whether there have been significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls.

Federal Taxation

General. The Company and the Bank are subject to federal income taxation in the same general manner as other corporations. For federal income tax purposes, the Company currently reports its income and expenses on the accrual method of accounting and uses a tax year ending March 31 for filing its consolidated federal income tax returns. For further information about the Federal income tax consequences for the Company, see Note 13 of the Notes to Consolidated Financial Statements within the Company’s 2004 Annual Report to Shareholders incorporated herein by reference as Exhibit 13.

State and Local Taxation

New York State Taxation. The Company and the Bank report income on a combined basis utilizing the Company’s fiscal year. New York State Franchise Tax on banking corporations is currently imposed in an amount equal to the greater of (a) 7.5% of “entire net income” allocable to New York State (b) 3% of “alternative entire net income” allocable to New York State (c) 0.01% of the average value of assets allocable to New York State or (d) nominal minimum tax. Entire net income is based on federal taxable income, subject to certain modifications.

Delaware State Taxation. As a Delaware holding company not earning income in Delaware, the Company is exempt from Delaware corporate income tax but is required to file an annual report with and pay an annual franchise tax to the State of Delaware. The tax is imposed as a percentage of the capital base of the Company with an annual maximum of $165,000.

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Executive Officers

The executive officers of the Company are elected annually and hold office until their respective successors have been elected and qualified or until death, resignation or removal by the Board of Directors. Each executive officer of the Company is also an executive officer of the Bank. There are no arrangements or understandings between the persons named and any other person pursuant to which such officers were selected.

Name

Age

Position Held with the Bank

Carl A. Florio

President & Chief Executive Officer

Timothy E. Blow

Chief Financial Officer

Sidney D. Richter

Executive Vice President

James F. Mackerer

Senior Vice President

Michael J. Mackay

Senior Vice President

The business experience of each executive officer who is not also a Director of the Company is set forth below.

Carl A. Florio, CPA. Mr. Florio was appointed President & Chief Executive Officer in 1996. From 1991 to 1996, Mr. Florio served as the Company’s Chief Financial Officer. Prior to this appointment as Chief Financial Officer, Mr. Florio was a partner at the accounting firm of Pattison, Koskey, Rath & Florio.

Timothy E. Blow, CPA. Mr. Blow became Chief Financial Officer of the Company in May 1997. Prior to his appointment as Chief Financial Officer, Mr. Blow was a senior manager at the accounting firm of KPMG LLP. Mr. Blow also serves as a director of Hudson City Associates, Inc. and as Secretary and Treasurer of Hudson River Funding Corp., wholly owned subsidiaries of the Bank.

Sidney D. Richter. Appointed to Executive Vice President in 2000, Mr. Richter served as the Company’s Senior Vice President of Lending from 1993-2000. From 1990 to 1993, Mr. Richter served as the Company's Vice President for Commercial Lending. Mr. Richter also serves as a director of each of the Bank's wholly owned subsidiaries.

James F. Mackerer. Mr. Mackerer became Senior Vice President of Retail Banking of the Company in February 2001. Prior to his appointment to Senior Vice President, Mr. Mackerer was Vice President of Commercial Lending and has been with the Company since 1993.

Michael J. Mackay. Mr. Mackay became Senior Vice President of Operations of the Company in 2002. From 1995 to 2002, Mr. Mackay served as the Company's Vice President of Loan Servicing.

Item 2. Properties

The Company conducts its business at its main office and forty-nine other banking offices. The net book value of the Company's premises and equipment (including land, buildings and leasehold improvements and furniture, fixtures and equipment) at March 31, 2004 was $27.4 million. The Company believes that its current facilities are adequate to meet the present and foreseeable needs of the Company and the Bank, subject to possible future expansion.

Item 3. Legal Proceedings

The Company is involved as plaintiff or defendant in various legal actions arising in the normal course of its business. While the ultimate outcome of these proceedings cannot be predicted with certainty, management, after consultation with counsel representing the Company in the proceedings, does not expect that the resolution of these proceedings will have a material effect on the Company's financial condition or results of operations.

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

None.

PART II

Item 5. Market for Registrant's Common Equity, Related Shareholder

Matters and Issuer Purchases of Equity Securities

The inside back cover of the attached 2004 Annual Report to Shareholders is herein incorporated by reference and attached hereto as Exhibit 13.

The following table discloses information regarding the open-market purchases of HRBT stock made by the Company during the quarter ending March 31, 2004 in accordance with Rule 10b-18 under the securities Exchange Act of 1934:

			Total Number
			of shares	Maximum Number
			Purchased as	of Shares that
	Total Number	Average	Part of Publicly	May Yet Be
	of Shares	Price Paid	Announced	Purchased Under
Period	Purchased (1)	Per Share	Plans	the Plans or Programs (2)

January 1 -
January 31, 2004	7,500	$ 20.50	N/A	3,023,234

February 1 -
February 29, 2004	10,000	$ 20.50	N/A	3,023,234

March 1 -
March 31, 2004	12,200	$ 18.93	N/A	3,023,234

Total	29,700	$ 19.86	N/A	3,023,234

(1) Shares purchased during the periods beginning January 1, 2004 and ending on March 31, 2004 were done in conjunction with the exercise of stock options under the Company’s 1998 Stock Option and Incentive Plan, as amended.

(2) In June 2003 the Company announced that its Board of Directors had approved a plan to repurchase approximately 10% of its outstanding common stock in open market purchases. The timing, volume, and price of shares purchases under the plan are at the discretion of the Company as market and conditions warrant. There is no expiration date for this repurchase plan. At the current time, the Company does not intend on making any purchases under this plan as a result of its recently announced merger with First Niagara Bancorp, Inc.

Item 6. Selected Financial Data

Page 5 of the attached 2004 Annual Report to Shareholders is herein incorporated by reference and attached hereto as Exhibit 13.

Item 7. Management's Discussion and Analysis of Financial

Condition and Results of Operations

Pages 6 through 20 of the attached 2004 Annual Report to Shareholders are herein incorporated by reference and attached hereto as Exhibit 13.

Item 7a. Quantitative and Qualitative Disclosures

About Market Risk

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Pages 15 through 16 of the attached 2004 Annual Report to Shareholders are herein incorporated by reference and attached hereto as Exhibit 13.

Item 8. Financial Statements and Supplementary Data

The following information appearing in the Company's Annual Report to Shareholders for the year ended March 31, 2004, is incorporated by reference in this Annual Report on Form 10-K and attached hereto as Exhibit 13.

	Pages in Annual Report
Report of Independent Registered Public Accounting Firm	21
Consolidated Balance Sheets as of March 31, 2004 and 2003	22
Consolidated Income Statements for the Years Ended March 31, 2004, 2003 and 2002	23
Consolidated Statements of Changes in Shareholders' Equity for the Years Ended March 31, 2004, 2003 and 2002	24
Consolidated Statements of Cash Flows for the Years Ended March 31, 2004, 2003 and 2002	25
Notes to Consolidated Financial Statements	26 to 48

Item 9. Changes in and Disagreements with Accountants on

Accounting and Financial Disclosure

None.

With the exception of the aforementioned information, the Company's Annual Report to Shareholders for the year ended March 31, 2004, is not deemed filed as part of this Annual Report on Form 10-K.

Item 9a. Controls and Procedures

An evaluation of our disclosure controls and procedures (as defined in Section 13(a)-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act")) as of March 31, 2004, was carried out under the supervision and with the participation of the Chief Executive Officer, Chief Financial Officer and several other members of our senior management within the 90-day period preceding the filing date of this annual report. Our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as currently in effect are effective in ensuring that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is (i) accumulated and communicated to our management (including our Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.

There have been no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Act) that occurred during the year ended March 31, 2004, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

We intend to continually review and evaluate the design and effectiveness of our disclosure controls and procedures and to improve our controls and procedures over time and to correct any deficiencies that we may discover in the future. The goal is to ensure that senior management has timely access to all material financial and non-financial information concerning the Company’s business. While we believe the present design of our disclosure controls and procedures is effective to achieve our goal, future events affecting our business may cause us to modify our disclosure controls and procedures.

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PART III

Item 10. Directors and Executive Officers of the Registrant

Directors

The Company's Board of Directors currently consists of nine members. The Board is divided into three classes, each of which contains one‑third of the Board. Approximately one‑third of the directors are elected annually. Directors of the Company are generally elected to serve for a three‑year period or until their respective successors are elected and qualified. In connection with the Company’s acquisition of Cohoes Bancorp, Harry L. Robinson was given a seat on the board for a term to expire at the annual meeting to be held in 2004. Mr. Robinson will no longer be continuing in office.

The table below sets forth certain information, as of the Record Date, regarding the composition of the Company's Board of Directors, including their terms of office. 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 any nominee) will be voted at the Meeting FOR the election of the nominees identified below. If any nominee is unable to serve, the shares represented by all valid 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 nominee might be unable to serve, if elected. There are no arrangements or understandings between the nominees and any other person pursuant to which the nominees were selected.

Name	Position(s) Held With the Bank	Age(1)	Director Since	Term Expires	Shares of Common Stock Beneficially Owned(2)	Percent of Class

NOMINEES
William H. Jones	Chairman of the Board	61	1998	2004	140,822(3)	*
Joseph W. Phelan	Director	62	1998	2004	179,344(4)	*

DIRECTORS CONTINUING IN OFFICE

Carl A. Florio	Director, President and Chief Executive Officer	55	1998	2005	972,446(5)	3.0
M. Bruce Cohen	Director	61	2001	2005	25,622	*
Anthony J. Mashuta	Director	47	2002	2005	24,622	*
Marilyn A. Herrington	Director	60	1998	2006	182,310	*
Ronald S. Tecler, DMD	Director	65	2002	2006	55,076	*
Richard Koskey	Director	65	2003	2006	115,622	*
Harry L. Robinson (7)	Director	64	2001	2004	96,122(6)	*

*	Less than 1%.
(1)	At June 1, 2004.
(2)	Amounts include shares held directly, as well as shares allocated to such individual's account under the ESOP, shares held jointly with family members, shares held in retirement accounts or shares held in a fiduciary capacity or by certain family members, with respect to which shares the individual may be deemed to have sole voting and/or investment power. The amounts shown also include 592,822, 48,110, 78,110 and 15,622 shares granted to President Florio, director Phelan, each of directors Jones and Herrington, and each of directors Koskey, Tecler, Cohen, Mashuta and Robinson, respectively, subject to currently exercisable options granted under the Stock Option Plan.
(3)	Includes 1,320 shares owned by Mr. Jones' children and 4,670 shares owned by Mr. Jones' spouse's IRA. Mr. Jones disclaims beneficial ownership with respect to those shares.
(4)	Includes 4,600 shares owned by Mr. Phelan’s children. Mr. Phelan disclaims beneficial ownership with respect to those shares.
(5)	Includes 2,000 shares owned by Mr. Florio's parents. Mr. Florio disclaims beneficial ownership with respect to those shares.
(6)	Includes 10,500 shares owned by Mr. Robinson's children. Mr. Robinson disclaims beneficial ownership with respect to those shares.
(7)	Mr. Robinson will no longer serve as a director following this annual meeting.

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The business experience of each director is set forth below. All directors have held their present positions for at least the past five years, except as otherwise indicated.

William H. (Tony) Jones. Mr. Jones is currently Chairman of the Board of Directors of the Company and the Bank, a position he has held since March 2003. Mr. Jones serves as President of Roe Jan Independent Publishing Co., Inc., Hillsdale, New York, a publisher of community newspapers and similar publications. Mr. Jones serves on the Executive Committee, Audit Committee and Loan Committee and as a director of Hudson City Associates, Inc. Mr. Jones also serves as a director of Hudson River Bank & Trust Company Foundation.

Joseph W. Phelan. Since 1983, Mr. Phelan has served as Chairman of Taconic Farms, Inc., Germantown, New York, a provider of laboratory animals for research. He is also Treasurer of the Reformed Church in Germantown, New York. Mr. Phelan serves on the Trust Committee, Audit Committee, Loan Committee and Compensation Committee.

Harry L. Robinson. Since April, 2001, Harry L. Robinson has been a Director of the Company. Mr. Robinson was President and Chief Executive Officer of Cohoes Bancorp, Inc. and its subsidiary, Cohoes Savings Bank, until its acquisition by the Company in April, 2001. Mr. Robinson serves on the Trust Committee. Mr. Robinson will no longer serve as a director after September 28, 2004.

Carl A. Florio. Mr. Florio has served as President and Chief Executive Officer of the Company since its incorporation and of the Bank since 1996. From 1993 until his appointment as President and Chief Executive Officer, Mr. Florio served as Chief Financial Officer of the Bank. Prior to his becoming the Bank's Chief Financial Officer, Mr. Florio was a partner in the accounting firm of Pattison, Koskey, Rath & Florio. Mr. Florio serves on the Executive Committee, Loan Committee and Trust Committee and as a Director of Hudson City Associates, Inc., a wholly-owned subsidiary of the Bank. Mr. Florio is also a Director of the Hudson River Bank & Trust Company Foundation.

M. Bruce Cohen. Mr. Cohen is a certified public accountant. From 1977 to 2000 he was employed as the managing partner of the Albany office of PricewaterhouseCoopers LLP. Mr. Cohen serves on the Audit Committee.

Marilyn A. Herrington. Ms. Herrington is involved in real estate investments and development. Ms. Herrington serves on the Nominating Committee and Compensation Committee. Ms. Herrington also serves as a Director of Hudson River Bank & Trust Company Foundation.

Ronald S. Tecler, DMD. Dr. Tecler is a practicing dentist. He has been in private practice since 1967. He served on the boards of Mohawk Community Bank and Ambanc Holding Co., Inc. and their predecessors from 1996 until 2002. Dr. Tecler serves on the Executive Committee.

Anthony J. Mashuta. Mr. Mashuta is currently the president of Cool Insuring Agency, Inc., an insurance agency. Mr. Mashuta has held this position since 1992. Mr. Mashuta serves on the Nominating Committee.

Richard Koskey. Mr. Koskey is a certified public accountant and certified financial planner. He is the managing principal of Pattison, Koskey & Roth P.C., a regional accounting firm. Mr. Koskey serves on the Nominating Committee.

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Meetings and Compensation of the Board of Directors and Committees and Corporate Governance Matters

Hudson River Bancorp, Inc. Meetings of the Company's Board of Directors are generally held on a quarterly basis. The Board of Directors met nine times during the fiscal year ended March 31, 2004. During fiscal 2004, no incumbent director of the Company attended fewer than 75% of the aggregate of the total number of Board meetings and the total number of meetings held by the committees of the Board of Directors on which he or she served. Directors of the Company are not paid a fee for serving on the Company Board.

The Board of Directors of the Company has established the Company's Executive, Audit, Loan, Trust, Nominating and Compensation Committees. The Board of Directors has adopted written charters for the Audit Committee and the Nominating Committee. The Board of Directors also adopted a Code of Business Conduct and Ethics that applies to all directors, officers and employees. You may obtain a copy of these documents free of charge by writing to the Corporate Secretary of the Company, One Hudson City Centre, Hudson, New York 12534 or by calling (518) 828-4600. In addition, the Code of Business Conduct and Ethics has been filed with the SEC as Exhibit 14 to the Company's Annual Report on Form 10-K for the year ended March 31, 2004. The charters for the Audit Committee and the Nominating Committee are attached as Exhibits 99.1 and 99.2, respectively, to the Company’s Annual Report on Form 10-K for the year ended March 31, 2004.

The Board has determined that Directors Cohen, Jones, Phelan, Mashuta, Herrington, Tecler and Koskey constituting a majority of the Board members, are "independent directors," as that term is defined in the Nasdaq listing standards. Stockholders may communicate directly with the Board of Directors by sending written communications to the Chairman of the Board.

The Company's Executive Committee exercises the powers of the full Board of Directors between board meetings, except that this Committee does not have the authority to amend the charter or bylaws, adopt a plan of merger, consolidation, dissolution, or provide for the disposition of all or substantially all of the property and assets of the Company. The Executive Committee is composed of Directors Florio, Tecler and Jones. The Executive Committee met twice during the year ended March 31, 2004.

The Audit Committee is comprised of Directors Cohen (Chairman), Jones and Phelan, all of whom are "independent directors" under the Nasdaq listing standards. The Board of Directors has determined that Director Cohen is an "audit committee financial expert" as defined in Item 401(h) of Regulation S-K of the Securities and Exchange Commission and that all of the Audit Committee members meet the independence and financial literacy requirements under the Nasdaq listing standards. In fiscal 2004, this Committee met five times. This Committee is responsible for hiring, terminating and/or reappointing the Company's independent auditor and for reviewing the annual audit report prepared by our independent auditors. The functions of the Audit Committee also include:

• approving non-audit and audit services to be performed by the independent auditors;

• reviewing and approving all related party transactions for potential conflict of interest situations;

• reviewing and assessing the adequacy of the Audit Committee Charter on an annual basis;

• reviewing significant financial information for the purpose of giving added assurance that the information is accurate and timely and that it includes all appropriate financial statement disclosures;

• ensuring the existence of effective accounting and internal control systems, and

• overseeing the entire audit function of the Company, both internal and independent.

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The Loan Committee is responsible for reviewing and approving loans which exceed the lending authority of the Bank's lending officers. The current members of this Committee are Directors Florio, Jones and Phelan. This Committee met twelve times during the year ended March 31, 2004.

The Trust Committee oversees the operations of the Trust Department of the Bank. The current members of this Committee are Directors Phelan, Robinson and Florio. This Committee met three times during the year ended March 31, 2004.

The Nominating Committee is composed of Directors Koskey, Mashuta and Herrington. The committee is primarily responsible for selecting nominees for election to the Board. The Nominating Committee generally meets once per year to make nominations. During the fiscal year ended March 31, 2004, the Nominating Committee met one time with respect to the selection of director nominees. The Nominating Committee will consider nominees recommended by stockholders in accordance with the procedures in the Company's bylaws, but the Nominating Committee has not actively solicited such nominations. Pursuant to the Company's Bylaws, nominations for directors by shareholders must be made in writing and delivered to the Corporate Secretary of the Company at least 90 days prior to the meeting and such written nomination must contain certain information as provided in the Company's Bylaws.

In accordance with its charter, the Nominating Committee has the following responsibilities:

(i) recommend to the Board the appropriate size of the Board and assist in identifying, interviewing and recruiting candidates for the Board;

(ii) recommend candidates (including incumbents) for election and appointment to the Board of Directors, subject to the provisions set forth in the Company's certificate of incorporation and bylaws relating to the nomination or appointment of directors, based on the following criteria: business experience, education, integrity and reputation, independence, conflicts of interest, diversity, age, number of other directorships and commitments (including charitable obligations), tenure on the Board, attendance at Board and committee meetings, stock ownership, specialized knowledge (such as an understanding of banking, accounting, marketing, finance, regulation and public policy) and a commitment to the Company's communities and shared values, as well as overall experience in the context of the needs of the Board as a whole;

(iii) review nominations submitted by stockholders, which have been addressed to the Corporate Secretary, and which comply with the requirements of the Company's certificate of incorporation and bylaws. Nominations from stockholders will be considered and evaluated using the same criteria as all other nominations;

(iv) annually recommend to the Board committee assignments and committee chairs on all committees of the Board, and recommend committee members to fill vacancies on committees as necessary, and

(v) perform any other duties or responsibilities expressly delegated to the Committee by the Board.

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Nominations, other than those made by the Nominating Committee, must be made pursuant to timely notice in writing to the Corporate Secretary as set forth in Section 6(c) of the Company's bylaws. In general, to be timely, a shareholder's notice must be received by the Company not less than 90 days prior to the date of the annual meeting; however, if less than 100 days' notice of the date of the scheduled annual meeting is given by the Company, the shareholder has until the close of business on the tenth day following the day on which notice of the date of the scheduled annual meeting was made. The shareholder's notice must include the information set forth in Section 6(c) of the Company's bylaws, which includes the following:

(i) as to each person whom a shareholder proposes to nominate for election as a director:

1. all information relating to the proposed nominee that is required to be disclosed in the solicitation of proxies for election as directors or is otherwise required pursuant to Regulation 14A under the Securities Exchange Act of 1934.

(ii) as to the shareholder giving the notice:

1. name and address of the shareholder as they appear on the Company's books;

2. number of shares of the Company's common stock beneficially owned by the shareholder.

The foregoing description is a summary of the Company's nominating process. Any shareholder wishing to propose a director candidate to the Company should review and must comply in full with the procedures set forth in the Company's certificate of incorporation and bylaws, and Delaware law.

The Compensation Committee recommends employee compensation, benefits and personnel policies to the Board of Directors, as well as salaries and cash bonus plan distributions concerning executive officers of the Company and the Bank. The current members of this Committee are Directors Phelan and Herrington. This Committee met one time during the year ended March 31, 2004.

Hudson River Bank & Trust Company. The Bank's Board of Directors consists of the same members as the Company's Board of Directors. The Bank's Board of Directors meets monthly and may have additional special meetings. The Board of Directors met thirteen times during the year ended March 31, 2004. During fiscal 2004, no incumbent director of the Bank attended fewer than 75% of the aggregate of the total number of Board meetings and the total number of meetings held by the committees of the Board of Directors on which he or she served.

Hudson River Commercial Bank. In November 2002, Hudson River Commercial Bank officially opened for business. The Commercial Bank's Board of Directors consists of the same members as the Company's Board of Directors. The Commercial Bank's Board of Directors meets monthly and may have additional special meetings. The Board of Directors met twelve times during the year ended March 31, 2004. During fiscal 2004, no incumbent director of the Bank attended fewer than 75% of the aggregate of the total number of Board meetings and the total number of meetings held by the committees of the Board of Directors on which he or she served. Directors of the Commercial Bank are not paid a fee for serving on the Commercial Bank’s Board.

Director Compensation. Non-employee directors of the Bank are paid a fee of $1,500 per meeting for serving on the Board of Directors of the Bank. During fiscal 2004, members of the Executive, Loan and Audit Committees each received $600 per committee meeting attended, and members of the Trust Committee, Nominating Committee and Compensation Committee received $300 per meeting attended.

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Executive Officers

Information concerning Executive Officers of the Company is incorporated herein by reference from Part I, Item 1 of this Annual Report on Form 10-K.

Code of Ethics

In May 2004, the Company adopted a written Code of Ethics based upon the standards set forth under Item 406 of Regulation S-K of the Securities Exchange Act. The Code of Ethics applies to all of the Company’s directors, officers and employees. A copy of the Company’s Code of Ethics is being filed with the SEC as Exhibit 14 to this Annual Report on Form 10-K.

Compliance with Section 16(a)

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, and persons who own more than 10% of a registered class of the Company's equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.

To the Company's knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the fiscal year ended March 31, 2004, all Section 16(a) filing requirements applicable to its officers, directors and greater than 10 percent beneficial owners were complied with.

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Item 11. Executive Compensation

The following table sets forth information concerning the compensation paid or granted to the Named Officers in fiscal 2004, 2003 and 2002 whose salary and bonus exceeded $100,000. No other executive officers had compensation (salary and bonus) in excess of $100,000 in fiscal 2004.

SUMMARY COMPENSATION TABLE
Annual Compensation				Long Term Compensation
				Awards
Name and Principal Position	Year	Salary ($)	Bonus ($)	Restricted Stock Award(s) ($)	Options (#)	All Other Compensation ($)(1)

Carl A. Florio, President and Chief Executive Officer	2004	$402,000	$251,000	$ ---	---	$59,006
	2003	352,000	147,980	---	---	46,336
	2002	302,000	102,060	---	---	58,521

Sidney D. Richter Executive Vice President	2004	$180,000	$90,950	---	---	$57,814
	2003	173,600	62,412	---	---	45,357
	2002	148,600	43,402	---	---	57,313

Timothy E. Blow Chief Financial Officer	2004	$160,000	$86,413	---	---	$57,393
	2003	151,800	53,526	---	---	44,973
	2002	126,800	34,358	---	---	53,786

James F. Mackerer Senior Vice President	2004	$96,500	$23,000	---	---	$34,299
	2003	93,600	12,500	235,417(2)	50,628(6)	23,582
	2002	90,000	11,500	22,740(3)	---	33,430
Michael J. Mackay Senior Vice President	2004	$90,000	$16,000	267,652(4)	48,628(7)	$28,357
	2003	75,000	8,000	3,557(5)	1,000(8)	15,679
	2002	61,000	7,000	4,548(5)	1,000(8)	20,161

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(1) Includes the following allotments:

	2004
	Life Insurance	ESOP Allocation	401(k) Allocation
Carl A. Florio	$ 387	$ 52,215	$ 6,404
Sidney D. Richter	$ 387	$ 52,215	$ 5,212
Timothy E. Blow	$ 387	$ 52,215	$ 4,791
James F. Mackerer	$ 387	$ 31,169	$ 2,743
Michael J. Mackay	$ 387	$ 27,523	$ 447
	2003
	Life Insurance	ESOP Allocation	401(k) Allocation
Carl A. Florio	$ 288	$ 40,146	$ 5,902
Sidney D. Richter	$ 288	$ 40,146	$ 4,923
Timothy E. Blow	$ 288	$ 40,146	$ 4,539
James F. Mackerer	$ 288	$ 21,279	$ 2,015
Michael J. Mackay	$ 288	$ 15,056	$ 335
		2002
	Life Insurance	ESOP Allocation	401(k) Allocation
Carl A. Florio	$ 288	$ 52,579	$ 5,654
Sidney D. Richter	$ 288	$ 52,579	$ 4,446
Timothy E. Blow	$ 288	$ 49,708	$ 3,790
James F. Mackerer	$ 288	$ 31,345	$ 1,797
Michael J. Mackay	$ 288	$ 19,568	$ 305

(2) Represents the value of 9,929 shares of restricted stock granted on April 1, 2002 to Mr. Mackerer pursuant to the Company's Recognition and Retention Plan. The shares vest ratably over an eight year period.

(3) Represents the value of 1,500 shares of restricted stock granted on April 19, 2001 to Mr. Mackerer pursuant to the Company's Recognition and Retention Plan. All of such shares vested on March 31, 2002.

(4) Represents the value of 22,258 shares of restricted stock granted on April 16, 2003 to Mr. Mackay pursuant to the Company's Recognition and Retention Plan. The shares vest ratably over an eight year period.

(5) Represents the value of 300 shares of restricted stock granted on each of April 1, 2002 and April 19, 2001 to Mr. Mackay pursuant to the Company's Recognition and Retention Plan. The shares vested on March 31, 2002 and March 31, 2003, respectively.

(6) Represents stock options granted to Mr. Mackerer on April 1, 2002 pursuant to the Company's Stock Option and Incentive Plan. The options vest ratable over a three year period.

(7) Represents stock options granted to Mr. Mackay on April 16, 2003 pursuant to the Company's Stock Option and Incentive Plan. The options vest ratably over a three year period.

(8) Represents stock options granted to Mr. Mackay on each of April 1, 2002 and April 19, 2001 pursuant to the Company's Stock Option and Incentive Plan. The options vested on March 31, 2002 and March 31, 2003, respectively.

The following table sets forth certain information concerning the number and value of unexercised stock options held by Messrs. Florio, Richter, Blow, Mackerer and Mackay at March 31, 2004.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
Name	Shares Acquired on Exercise (#)	Value Realized ($)	Number of Securities Underlying Unexercised Options at FY-End (#)		Value of Unexercised In-the-Money Options at FY-End ($)(1)
			Exercisable	Unexercisable	Exercisable	Unexercisable
Carl A. Florio	4,000	$ 24,920	592,882	--	$ 8,804,298	--
Sidney D. Richter	2,000	$ 13,400	281,944	--	$ 4,186,868	--
Timothy E. Blow	--	--	298,074	--	$ 4,426,399	--
James F. Mackerer	--	--	43,124	16,876	$ 434,335	$ 147,581
Michael J. Mackay	--	--	27,582	32,418	$ 299,940	$ 277,984

(1) Amounts represent the difference between the exercise prices ($5.75 with respect to Messrs. Florio, Richter and Blow; $5.75 and $11.86 with respect to Mr. Mackerer; and $5.75, $7.58, $11.86, and $12.03 with respect to Mr. Mackay) and the fair market value at March 31, 2004.

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Consulting Agreement. On May 1, 2001, the Company entered into a consulting agreement (the "Agreement") with Harry Robinson, a director of the Company and the Bank. Under the terms of the Agreement, Mr. Robinson will receive for a period of five years a consulting fee of $150,000 per year in exchange for consulting services in connection with the business of the Company and the Bank. The consulting services include consulting with the Company regarding the operations and customer relationships of the Company, providing introductions to customers, serving as senior adviser to the Bank and providing general merger and acquisition advice. In connection with the Agreement, Mr. Robinson's services are limited to 50 hours in any calendar month.

In the event of a Change in Control of the Company during the period of the Agreement, Mr. Robinson may elect to have all of the consulting fees owed to him for the remainder of the term of the Agreement become immediately due and payable upon completion of the Change in Control. Mr. Robinson will continue to provide consulting services during the remainder of the term of the Agreement provided that he is no longer required to provide general merger and acquisition advice, the number of hours of service will be limited to 15 in any calendar month following the Change in Control and his services will be provided from any location he selects. A Change in Control is defined in the Agreement as consummation of a transaction that would result in the reorganization, merger or consolidation of the Company, with one or more other persons with exceptions as described in the Agreement.

Non-Competition Agreement. In addition to the Consulting Agreement described above, the Company also entered into a Non-Competition Agreement with Mr. Robinson on May 1, 2001. Under the terms of the Non-Competition Agreement, Mr. Robinson agreed that for a period of five years after May 1, 2001, he would not (i) engage directly or indirectly in the banking or financial services business other than on behalf of the Company or its affiliates within the Market Area which consists of each of the counties in any state of the United States in which the Company or any of its affiliates has a deposit-taking or lending office (ii) directly or indirectly own, manage, operate, control, be employed by, or provide management consulting or advisory service in any capacity to any firm, corporation or other entity (other than the Company or its affiliates) engaged directly or indirectly in the banking or financial services business in the Market Area, or (iii) directly or indirectly solicit or otherwise intentionally cause any employee, officer or member of the Board of Directors of the Company or its affiliates in any action prohibited under (i) or (ii) above. In consideration for the above, the Company paid Mr. Robinson $200,000 on May 1, 2001 and will pay Mr. Robinson $250,000 on the fifth anniversary of the date of the Non-Competition Agreement.

Employment Agreements. The Bank entered into employment agreements with Messrs. Florio, Richter, Blow, Mackerer and Mackay, and Hudson River entered into employment agreements with Messrs. Florio, Richter and Blow. The employment agreements ensure that the Bank and Hudson River are able to maintain a stable and competent management base. The continued success of the Bank and Hudson River depends to a significant degree upon the skills and competence of the above referenced officers.

The employment agreements provide for either three-year or two-year terms for each executive. The terms of the employment agreements are extended for each executive on a daily basis unless written notice of non-renewal is given by the board. The employment agreements provide that the executive's base salary is reviewed annually. In addition to the base salary, the employment agreements provide for, among other things, participation in stock benefit plans and other fringe benefits applicable to executive personnel. The agreements provide for termination by the Bank or Hudson River for cause at any time. In the event the Bank or Hudson River chooses to terminate the executive's employment for reasons other than for cause, or in the event of the executive's resignation from the Bank and Hudson River upon: (i) failure to re-elect the executive to his/her current offices; (ii) a material change in the executive's functions, duties or responsibilities; (iii) a reduction in the benefits and perquisites being provided to the executive under the employment agreement; (iv) a liquidation or dissolution of the Bank or Hudson River; or (v) a breach of the agreement by the Bank or Hudson River, the executive or, in the event of death, his/her beneficiary would be entitled to receive an amount equal to the remaining base salary and bonus payments due to the executive for the remaining term of the employment agreement and the contributions that would have been made on the executive's behalf to any employee benefit plans of the Bank and Hudson River during the remaining term of the agreement. The Bank and Hudson River would also continue and pay for the executive's life, health, dental and disability coverage for the remaining term of the agreement. Upon any termination of the executive, other than following a change in control, the executive is subject to a one year non-competition agreement.

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Under the employment agreements, if voluntary or involuntary termination follows a change in control of the Bank or Hudson River, the executive or, in the event of the executive's death, his/her beneficiary, would be entitled to the payment of base salary, plan contributions and other forms of compensation to which the executive would be entitled for the remaining term of the employment agreement plus a severance payment equal to the greater of: (i) the payments due for the remaining terms of the agreement; or (ii) three times the average of the five preceding taxable years' annual compensation for Mr. Florio, and two times the average of the five preceding taxable years' annual compensation for the four other individuals. The Bank and Hudson River would also continue the executive's life, health, and disability coverage for thirty-six months for Messrs. Florio, Richter and Blow, and twenty-four months for the other two individuals. Under the employment agreements, a voluntary termination following a change in control means the executive's voluntary resignation following any demotion, loss of title, office authority or responsibility, a reduction in compensation or benefits, or relocation. Notwithstanding that both the Bank and Hudson River employment agreements provide for a severance payment in the event of a change in control, the executive would only be entitled to receive a severance payment under one agreement.

Payments to the executive under the Bank's employment agreement are guaranteed by Hudson River in the event that payments or benefits are not paid by the Bank. Payment under Hudson River's employment agreement would be made by Hudson River. Hudson River's employment agreement also provides that Hudson River compensates the executive for excise taxes imposed on any "excess parachute payments," as defined under section 280G of the Internal Revenue Code and any additional income and excise taxes imposed as a result of such compensation. All reasonable costs and legal fees paid or incurred by the executive pursuant to any dispute or question of interpretation relating to the employment agreements shall be paid by the Bank or Hudson River, respectively, if the executive is successful on the merits pursuant to a legal judgment, arbitration or settlement. The employment agreements also provide that the Bank and Hudson River shall indemnify the executive to the fullest extent allowable under New York and Delaware law, respectively. In the event of a change in control of the Bank or Hudson River, the total amount of payments due under the employment agreements, based solely on cash compensation and severance payments and excluding any benefits (including future benefits) under any employee benefit plan or arrangements (or cashout thereof) or reimbursement for taxes which may be payable, would be approximately $8.2 million.

Change in Control Agreements. The Bank entered into two-year Change in Control (CIC) Agreements with seven officers of the Bank, and one-year CIC Agreements with eight officers of the Bank, none of whom are covered by employment agreements. The terms of the Bank CIC agreements are extended for each officer on a daily basis unless written notice of non-renewal is given by the board. The Bank's CIC Agreements provide that in the event voluntary or involuntary termination follows a change in control of Hudson River or the Bank, the officer would be entitled to receive a severance payment equal to either two times or one time, respectively, the officer's average cash compensation for the five most recent taxable years. The Bank would also continue to pay for the officer's life, health and disability coverage for twenty-four months or twelve months, respectively, following termination. Under the CIC Agreements, a voluntary termination following a change in control means the executive's voluntary resignation following any demotion, loss of title, office authority or responsibility, a reduction in compensation or benefits, or relocation. In the event of a change in control of Hudson River or the Bank, the total payments that would be due under the CIC Agreements, based solely on the five year average cash compensation paid to the officers covered by the CIC Agreements and excluding any benefits under any employee benefit plan which may be payable, would be approximately $1.5 million.

Employee Severance Compensation Plan. The Bank's board established the Hudson River Bank & Trust Company Employee Severance Compensation Plan which provides designated employees with severance pay benefits in the event of a change in control of the Bank or Hudson River. Management personnel with employment agreements or CIC Agreements are not eligible to participate in the severance plan. Generally, designated employees are eligible to participate in the severance plan if they have completed at least one year of service with the Bank. The severance plan vests in each participant a contractual right to the benefits such participant is entitled to thereunder. Under the severance plan, in the event of a change in control of the Bank or Hudson River, eligible employees who are terminated from or terminate their employment within one year (for reasons specified under the severance plan), are entitled to receive a severance payment. If the participant, whose employment has terminated, has completed at least one year of service, the participant is entitled to a cash severance payment equal to the last two weeks of annual compensation immediately preceding a change-in-control for each year of service up to a maximum of 100% of annual compensation. Such payments may tend to discourage takeover attempts by increasing costs to be incurred by the Bank in the event of a takeover. In the event the provisions of the Severance Plan are triggered, the total amount of payments that would be due thereunder, based solely upon current salary levels, would be approximately $311 thousand. However, it is management's belief that certain of the Bank's employees would be retained in their current positions in the event of a change in control, and that any amount payable under the severance plan would be considerably less than the total amount that could possibly be paid under the severance plan.

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Benefit Plans. The Bank currently provides health care benefits to its employees, including hospitalization, major medical, dental, life and disability insurance, subject to certain deductibles and copayments by employees.

Defined Benefit Pension Plan. The Bank sponsors a defined benefit pension plan for its employees. Salaried employees are eligible to participate in the pension plan following the completion of one year of service (1,000 hours worked during a continuous 12-month period) and attainment of 21 years of age. A participant must reach five years of service before attaining a vested interest in his or her retirement benefits, after which such participant is 100% vested. The pension plan is funded solely through contributions made by the Bank.

The benefit provided to a participant at normal retirement age (generally age 65) is equal to 2% of Average Compensation less 0.5% of Final Three Year Average Compensation (limited to Covered Compensation) for each year of service up to a maximum of 25 years. Compensation for this purpose is the participant's basic annual salary, including any contributions through a salary reduction arrangement to a cash or deferred plan, but exclusive of overtime, bonuses, severance pay, or any special payments or other deferred compensation arrangements. “Average Compensation” is the average of compensation during the 60 consecutive months of the last 120 months of employment affording the highest such average. “Covered Compensation” is the average of the Social Security taxable wage base for the 35 years ending with the year an individual attains Social Security Retirement Age.

The annual benefit provided to participants (i) at early retirement age (generally age 62) with five years of service who elect to defer the payment of their benefits to normal retirement age, (ii) at early retirement age with five years of service who elect to receive payment of their benefits prior to normal retirement age, or (iii) who postpone annual benefits beyond normal retirement age as described in the paragraph above. A participant eligible for early retirement benefits who does not meet the requirements set forth above will have his or her benefits adjusted as further described in the pension plan. The pension plan also provides for disability and death benefits.

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The following table sets forth, as of March 31, 2004, estimated annual pension benefits for individuals at age 65 payable in the form of a life annuity under the most advantageous plan provisions for various levels of compensation and years of service. The amounts in this table are based upon the assumption that the Pension Plan continues in its present form and do not reflect offsets for Social Security benefits and do not reflect benefits payable under the ESOP. At March 31, 2004, the estimated years of credited service of Messrs. Florio, Richter, Blow, Mackerer and Mackay were eleven, thirteen, seven, eleven and eight years, respectively.

Pension Plan Table Years of Benefit Service
Final Average Salary	15	20	25	30

$ 75,000	$19,202	$25,603	$32,004	$32,004
$100,000	$26,702	$35,603	$44,504	$44,504
$125,000	$34,202	$45,603	$57,004	$57,004
$150,000	$41,702	$55,603	$69,504	$69,504
$160,000	$44,702	$59,603	$74,504	$74,504
$170,000	$47,702	$63,603	$79,504	$79,504
$180,000	$50,702	$67,603	$84,504	$84,504
$190,000	$53,702	$71,603	$89,504	$89,504
$200,000	$56,702	$75,603	$94,504	$94,504

For the 2003 calendar year, the maximum compensation is limited to $200,000. The maximum benefit payable under the qualified plan for the 2003 calendar year is $160,000.

Benefit Restoration Plan. Hudson River also maintains a non-qualified supplemental retirement plan, known as the Benefit Restoration Plan. The Benefit Restoration Plan provides certain officers and highly compensated executives of Hudson River and the Bank with supplemental retirement income when such amounts cannot be paid from the tax-qualified Pension Plan, 401(k) Plan or ESOP. Participants in the Benefit Restoration Plan receive a benefit equal to the amount they would have received under the Pension Plan, the 401(k) Plan and the ESOP, but for reductions in such benefits imposed by operation of Sections 401(a)(17), 401(m), 401(k)(3), 402(g) and 415 of the Internal Revenue Code. In addition, the Benefit Restoration Plan is intended to make up benefits lost under the ESOP allocation procedures to certain participants named by the Compensation Committee who retire prior to the complete repayment of the ESOP loan. At the retirement of a participant, the restored ESOP benefits under the Benefit Restoration Plan are determined by first: (1) projecting the number of shares that would have been allocated to the participant under the ESOP if they had been employed throughout the period of the ESOP loan (measured from the participant's first date of ESOP participation); and (2) first reducing the number determined by (1) above by the number of shares actually allocated to the participant's account under the ESOP; and second, by multiplying the number of shares that represent the difference between such figures by the average fair market value of the common stock over the preceding five years. Benefit Restoration Plan participant's benefits are payable upon the retirement or other termination of service of the participant in the form of a lump sum. Payment of a deceased participant's benefits will be made to his or her designated beneficiary.

Stock Based Benefit Plans. Hudson River also maintains an amended 1998 Stock Option and Incentive Plan and an amended 1998 Recognition and Retention Plan.

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Compensation Committee Report on Executive Compensation.

The information contained in this report shall not be deemed to be "soliciting material" or to be "filed" with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future 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 it by reference in such filing.

In fulfillment of SEC requirements for disclosure in proxy materials of the Compensation Committee's policies regarding compensation for executive officers, the committee has prepared the following report for inclusion in this proxy statement.

Decisions on compensation of Hudson River's executives are made by the Compensation Committee of the Board. Each member of the committee is a non-employee director. The committee believes that the actions of each executive officer have the potential to impact the short-term and long-term profitability of Hudson River. Consequently, the committee places considerable importance on its task of designing and administering an executive compensation program.

Compensation Policy. The Compensation Committee has developed an executive compensation policy designed to (1) offer competitive compensation to attract, motivate, retain and reward executive officers who are crucial to the long-term success of Hudson River; and (2) encourage decision-making that maximizes long-term shareholder value. The Compensation Committee has sought to consider a multitude of factors establishing appropriate levels of compensation for executive officers, with no one factor clearly overshadowing all the others.

The compensation package provided to the executive officers of Hudson River is composed principally of base salary and cash and stock-based incentive awards. Executive officers also participate in other benefit plans available to all eligible employees, including the ESOP.

The Compensation Committee considers a variety of factors in determining executive compensation. These factors generally fall into two categories, those that relate to specific work performed and expected of the officer and those that relate to Hudson River, the Bank, the local business economic conditions and other general matters. In the former category, the Committee considers, among other factors, the level of responsibility of each officer; the expertise and skill level required to perform the position; satisfaction of prior period goals and objectives; length of service; the complexity of work that may be required in connection with strategic plans or special projects; and prior compensation history. In the latter category, the Committee considers, among other factors, Hudson River's earnings, capital and asset size; the results of government regulatory examinations; the Bank's regulatory ratings on safety and soundness as well as Community Reinvestment Act examinations; and performance and compensation programs of peer group Banks.

Employee benefit plans represent an important component of any compensation package. The defined benefit pension plan and health insurance benefits available to all employees, including executive officers, provide competitive benefits comparable to those available at other institutions. Stock-based compensation plans, including the ESOP, the 1998 Stock Option and Incentive Plan and the 1998 Recognition and Retention Plan, provide employees, including executive officers, with additional equity-based incentives to maximize long-term shareholder value. Cash bonuses are used to provide incentives to both executive officers and other employees in relation to specific projects or additional responsibilities.

The Compensation Committee's decisions are discretionary and are based upon subjective factors. No mathematical or similar objective formula is used to determine any compensation package. The Compensation Committee believes that a competitive employee benefit package is essential to achieving the goals of attracting and retaining highly qualified employees.

Chief Executive Officer. Total annual compensation paid to Carl A. Florio, President and Chief Executive Officer, for fiscal 2004 was $653,000 as detailed in the above compensation table and reflects a 31% increase from fiscal 2003. In determining total compensation paid to the Chief Executive Officer, including his benefits under the Benefit Restoration Plan, the Compensation Committee considered the factors discussed above and also considered a number of specific matters including stock-based compensation and benefit plans awarded or made available to chief executive officers of other financial institutions.

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Compensation Committee Interlocks and Insider Participation. Sidney D. Richter, Executive Vice President of Hudson River and the Bank, also serves as a director of Taconic Farms, Inc. Director Phelan, a member of the Compensation Committee of Hudson River and the Bank, also serves as the Chairman of Taconic Farms, Inc.

This report is included herein at the direction of the Compensation Committee members.

Joseph W. Phelan

Marilyn A. Herrington

Report of the Audit Committee of the Board of Directors

The following Report of the Audit Committee of the Board of Directors shall not be deemed to be soliciting material or to be incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent Hudson River specifically incorporates this Report therein, and shall not otherwise be deemed filed under such Acts.

Membership and Role of the Audit Committee. The Audit Committee consists of the following members of the Company's Board of Directors: Cohen, Jones and Phelan. Each of the members of the Audit Committee is independent as defined under the Nasdaq listing standards. The Audit Committee operates under a written charter adopted by the Board of Directors.

Management is responsible for the Company's internal controls and financial reporting process. KPMG, the Company's independent auditors, is responsible for performing an independent audit of the Company's consolidated financial statements in accordance with auditing standards generally accepted in the United States of America and to issue a report thereon. The Company's internal auditors are responsible for monitoring compliance with internal policies and procedures. The Committee is responsible for providing independent and objective oversight to these processes. In performing its oversight, the Committee reviews the performance of its independent auditors and its internal auditors.

As required by our charter, we received and reviewed the report of KPMG regarding the results of their audit, as well as the written disclosures and the letter from KPMG required by Independence Standards Board Standard No. 1 (Independence Discussion with Audit Committees). We also reviewed and discussed the audited financial statements with Company management. A representative of KPMG also discussed with the Audit Committee the independence of KPMG from the Company, as well as the matters required to be discussed by Statement of Auditing Standards No. 61 (Communication with Audit Committees).

In fulfilling our oversight responsibility of reviewing the services performed by the Company's independent auditors, we carefully reviewed the policies and procedures for the engagement of the independent auditors. We also discussed with the Company's internal and independent auditors the overall scope and plans for their respective audits. We met with the internal and independent auditors, both with and without management present, to discuss the results of their examinations, the evaluations of the Company's internal controls, and the overall quality of the Company's financial reporting. We pre‑approve all audit and permissible non‑audit services provided by our independent auditors. These services may include audit services, audit‑related services, tax services and other services. Prior to engaging our independent auditors to render an audit or permissible non‑audit service, we specifically approve the engagement of our independent auditors to render that service. Accordingly, the Company does not engage our independent auditors to render audit or permissible non‑audit services pursuant to pre‑approval policies or procedures or otherwise, unless the engagement to provide such services has been approved by the Audit Committee in advance. As such, the engagement of KPMG to render 100 percent of the services described in the categories above was approved by the Audit Committee in advance of the rendering of those services. We also reviewed and discussed with the independent auditors the fees paid to the independent auditors; these fees are described under "Item 14." below.

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In reviewing the services performed by KPMG, however, the Committee relies on the appropriateness of financial statements and other information, opinions, reports and statements provided to the Committee by management, the independent auditors and the internal auditors. Accordingly, the Committee's oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The Committee's oversight does not assure that the audit of the Company's consolidated financial statements has been carried out in accordance with auditing standards generally accepted in the United States of America or that the audited consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America.

Review of the Company's Audited Consolidated Financial Statements for the Fiscal Year ended March 31, 2004. The Audit Committee has reviewed and discussed the audited consolidated financial statements of the Company for the fiscal year ended March 31, 2004 with the Company's management. The Audit Committee has discussed with KPMG, the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees).

The Company’s Chief Executive Officer and Chief Financial Officer also reviewed with the Audit Committee the certifications that each officer will file with the SEC pursuant to the requirements of Section 302 and 906 of the Sarbanes-Oxley Act of 2002 and the policies and procedures adopted to ensure the accuracy of such certifications.

Based on the Audit Committee's review and discussions noted above, the Audit Committee recommended to the Board of Directors that the Company's audited consolidated financial statements be included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2004, for filing with the Securities and Exchange Commission.

M. Bruce Cohen

William H. Jones

Joseph W. Phelan

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Comparative Stock Performance Presentation

Set forth below is a line graph comparing the cumulative total return on the Company's Common Stock to the cumulative total return of the Nasdaq Bank Index and the S&P 500 Index for each annual period from March 31, 1999 through March 31, 2004. The presentation assumes $100 was invested on March 31, 1999 in the Company's Common Stock and in each of the indices and assumes the reinvestment of all dividends. Historical stock price performance is not necessarily indicative of future stock prices.

		Period Ending
Index	03/31/99	03/31/00	03/31/01	03/31/02	03/31/03	03/31/04
Hudson River Bancorp, Inc.	100.00	92.45	131.14	231.08	224.28	409.71
S&P 500*	100.00	118.36	92.60	92.94	69.91	94.60
NASDAQ Bank Index*	100.00	90.49	109.66	135.29	122.50	166.04

Item 12. Security Ownership of Certain Beneficial

Owners and Management and Related Stockholder Matters

At June 1, 2004, the Company had 30,365,944 shares of common stock outstanding.

The following table sets forth information, as of the Record Date, regarding share ownership of (i) those persons or entities known by management to beneficially own more than five percent of the Common Stock ("Five Percent Beneficial Owners"), (ii) each officer of the Company and the Bank who made in excess of $100,000 (salary and bonus) (the "Named Officers") during the 2004 fiscal year ("fiscal 2004"); and (iii) all directors and executive officers of the Company and the Bank as a group.

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Beneficial Owner	Shares Beneficially Owned at June 1, 2004	Percent of Class

Five Percent Beneficial Owners
Private Capital Management, L.P. Bruce S. Sherman Gregg J. Powers 8889 Pelican Bay Blvd. Naples, Florida 34108	2,771,348(2)	8.7%
Hudson River Bank & Trust Company Employee Stock Ownership Plan One Hudson City Centre Hudson, New York 12534	2,736,884(1)	8.6


Named Officers(3)
Carl A. Florio, Director, President and Chief Executive Officer	972,446(4)	3.0
Sidney D. Richter, Executive Vice President	483,203(5)	1.5
Timothy E. Blow, Chief Financial Officer	416,157(6)	1.3
James F. Mackerer, Senior Vice President	97,131(7)	*
Michael J. Mackay, Senior Vice President	45,875(8)	*

All Directors and Executive Officers as a Group (13 persons) (3)	2,834,352	8.9%

*	Less than 1%.
(1)	The amount reported represents shares held by the Hudson River Bank & Trust Company Employee Stock Ownership Plan (the "ESOP"), 1,223,696 of which were allocated to accounts of participants. First Bankers Trust Co., N.A., Quincy, Illinois, the trustee of the ESOP, may be deemed to beneficially own the shares held by the ESOP which have not been allocated to the accounts of participants. Unallocated shares will be voted by the trustee in the same proportion as allocated shares for which it received instructions, subject to the requirements of applicable law and the fiduciary duties of the trustee. The ESOP administrators are entitled to direct the voting of the allocated shares for which timely voting instructions are not received from the participants.
(2)	The above information regarding beneficial ownership by Private Capital Management, L.P., Bruce S. Sherman and Gregg J. Powers is reported by them in an amended statement dated February 13, 2004, on Schedule 13-G under the Securities Exchange Act of 1934, as amended. Private Capital Management reported shared voting and shared dispositive power over 2,771,348 shares. Private Capital Management, L.P. filed the Schedule 13-G on behalf of Private Capital Management, L.P., Bruce S. Sherman, its Chairman, and Gregg J. Powers, its President. Mr. Sherman reported shared voting and dispositive power over 2,614,948 shares and sole voting and dispositive power over 140,400 shares. Mr. Powers reported shared voting and dispositive power over 2,614,948 shares.
(3)	Amounts include shares held directly, as well as shares allocated to the ESOP accounts of group members, shares held jointly with family members, shares held in retirement accounts or shares held in a fiduciary capacity or by certain family members, and shares subject to options exercisable within 60 days of June 1, 2004
(4)	Includes 592,882 shares subject to options exercisable within 60 days of June 1, 2004, and 56,370 shares held in a deferred compensation account. Amount also includes 2,000 shares owned by Mr. Florio's parents, as to which he disclaims beneficial ownership.
(5)	Includes 265,944 shares subject to options exercisable within 60 days of June 1, 2004, and 14,374 shares held in a deferred compensation account.
(6)	Includes 298,074 shares subject to options exercisable within 60 days of June 1, 2004, and 16,180 shares held in a deferred compensation account.
(7)	Includes 43,124 shares subject to options exercisable within 60 days of June 1, 2004, and 1,100 shares held in a deferred compensation account. Amount also includes 1,200 shares held by Mr. Mackerer’s children and 12,000 shares held by Mr. Mackerer and his spouses’ parents as to which he disclaims beneficial ownership.
(8)	Includes 27,582 shares subject to options exercisable within 60 days of June 1, 2004, and 2,848 shares held in a deferred compensation account.

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Information concerning compensation plans under which shares of Hudson River common stock may be issued is contained in Note 10 of the Notes to Consolidated Financial Statements contained in the Annual Report to Shareholders attached hereto as Exhibit 13 and incorporated by reference herein.

Item 13. Certain Relationships and Related Transactions

Federal laws require that all loans or extensions of credit to executive officers and directors must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with the general public and must not involve more than the normal risk of repayment or present other unfavorable features. As of March 31, 2004, all outstanding loans to the Bank's executive officers and directors were made in the ordinary course of business and on the same terms, including collateral and interest rates, as those prevailing at the time for comparable transactions with the general public, and do not involve more than the normal risk of collectiblity.

Item 14. Principal Accountant Fees and Services

During the fiscal year ended March 31, 2004, KPMG provided various audit, audit-related and non-audit services to the Company as follows: (a) the audit of the Company's fiscal 2004 annual financial statements and review of financial statements in the Company's Quarterly Reports on Form 10-Q, (b) audits of employee benefit plans and (c) tax services. The aggregate fees billed to the Company by KPMG and its affiliates for the fiscal years ended March 31, 2004 and 2003 were as follows:

	Year Ended March 31,
	2004	2003
Audit Fees	$164,000	$154,750
Audit Related Fees (1)	15,600	29,800
Tax Fees (2)	99,975	244,370
All Other Fees (3)	--	11,400


(1) Primarily for employee benefit plan audits.
(2) Primarily for tax compliance, tax advice and tax return preparation services.
(3) Primarily for technology assessment and merger assistance.

The Audit Committee of the Board has considered whether the services provided as described in sections (1), (2), and (3) above is compatible with maintaining KPMG's independence.

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PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)(1) Financial Statements: See Part II – Item 8. Financial Statements and Supplementary Data.

(a)(2) Not applicable.

(a)(3) Exhibits: See subitem (c) of Item 15.

(b) Current reports on Form 8-K.

(c) Exhibits:


Regulation S-K Exhibit Number		Document	Reference to Prior Filing or Exhibit Number Attached Hereto
	3(i)	Certificate of Incorporation	*
	3(ii)	Bylaws	****
	4	Instruments defining the rights of security holders, including debentures	*
	10	Material Contracts
		Employment Agreement between Hudson River Bank & Trust Company and certain executive officers	*
		Employment Agreement between Hudson River Bancorp, Inc. and certain executive officers	*
		Change-In-Control Severance Agreement with certain officers of Hudson River Bank & Trust Company	*
		Hudson River Bank & Trust Company Employee Severance Compensation Plan	*
		Employee Stock Ownership Plan	*
		Benefit Restoration Plan	**
		1998 Stock Option and Incentive Plan	***
		1998 Recognition and Retention Plan	***
	13	Annual Report to Shareholders	13
	14	Code of Ethics	14
	21	Subsidiaries of Registrant	21
	23	Consent of Independent Registered Public Accounting Firm	23
	31.1	Rule 13(a)-14(a) Certification (Chief Executive Officer)	31.1
	31.2	Rule 13(a)-14(a) Certification (Chief Financial Officer)	31.2
	32	Section 1350 Certification	32
	99.1	Charter of the Audit Committee	99.1
	99.2	Charter of the Nominating Committee	99.2

* Filed as exhibits to the Company's Form S-1 registration statement filed on March 9, 1998 (File No. 333‑47605) under the Securities Act of 1933. All of such previously filed documents are hereby incorporated herein by reference in accordance with Item 601 of Regulation S-K.

** Filed as exhibits to the Company's Pre-effective Amendment No. One to Form S-1 filed on May 1, 1998 (File No. 333‑47605) under the Securities Act of 1933. All of such previously filed documents are hereby incorporated herein by reference in accordance with Item 601 of Regulation S-K.

*** Filed as exhibits to the Company’s Proxy Statement filed on November 13, 1998 in connection with the Company’s Special Meeting for Shareholders and hereby incorporated by reference.

**** Filed as exhibits to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1999 under the Securities and Exchange Act of 1934, filed with the SEC on June 28, 1999, and incorporated herein by reference in accordance with Item 601 of Regulation S-K. Amendments to the Company’s bylaws were filed as exhibits to the Company’s current report on Form 8-K filing on May 14, 2001, and incorporated herein by reference.

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(b) Financial Statement Schedules

All financial statement schedules are omitted since the required information is either not applicable, is immaterial or is included in the consolidated financial statements of the Company and notes thereto in the Annual Report.

(c) Reports on Form 8-K

A current report on Form 8-K was filed with the SEC on January 15, 2004 releasing the Company’s earnings results for the three and nine months ended December 31, 2003.

A current report on Form 8-K was filed with the SEC on April 2, 2004 to announce the Company's signing of a definitive agreement to be acquired by First Niagara Financial Group.

A current report on Form 8-K was filed with the SEC on April 5, 2004 detailing the agreement and plan of merger by and between First Niagara Financial Group, Inc. and Hudson River Bancorp, Inc.

A current report on Form 8-K was filed with the SEC on April 15, 2004 releasing the Company’s earnings results for the three and twelve months ended March 31, 2004.

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SIGNATURES

Pursuant to the requirements of Section 15(d) 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.

HUDSON RIVER BANCORP, INC.

By: /s/ Carl A. Florio

Carl A. Florio, President and Chief Executive Officer

(Duly Authorized Representative)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated.

/s/ Carl A. Florio Carl A. Florio, Director, President and Chief Executive Officer (Principal Executive and Operating Officer) Date: June 14, 2004		/s/ William H. Jones William H. Jones, Chairman of the Board Date: June 14, 2004

/s/ Ronald S. Tecler Ronald S. Tecler, Director Date: June 14, 2004		/s/ Joseph W. Phelan Joseph W. Phelan, Director Date: June 14, 2004

/s/ Marilyn A. Herrington Marilyn A. Herrington, Director Date: June 14, 2004		/s/ Richard P. Koskey Richard P. Koskey, Director Date: June 14, 2004
/s/ Anthony J. Mashuta Anthony J. Mashuta, Director Date: June 14, 2004		/s/ M. Bruce Cohen M. Bruce Cohen, Director Date: June 14, 2004

/s/ Harry L. Robinson Harry L. Robinson, Director Date: June 14, 2004		/s/ Timothy E. Blow Timothy E. Blow, Chief Financial Officer (Principal Financial and Accounting Officer) Date: June 14, 2004

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EXHIBIT 13

2004 ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights

(In thousands, except per share data)

March 31,

2004

2003

For the Year Ended

Net income

$ 31,788

$ 27,854

Basic earnings per share (1)

1.14

1.01

Diluted earnings per share (1)

1.10

0.97

At Year End

Total assets

$ 2,618,830

$ 2,494,912

Loans

1,665,699

1,649,086

Deposits

1,820,973

1,798,373

Shareholders' equity

287,777

258,243

Book value at year end (1)

10.17

9.22

Tangible book value at year end (1)

7.68

6.67

Selected Operating Ratios

Return on average assets

1.25%

1.12%

Return on average equity

11.81

11.33

Return on average tangible equity

16.02

16.00

Dividend payout ratio

26.61

24.04

Net interest margin

3.71

4.09

Net interest spread

3.41

3.73

Efficiency ratio

50.39

53.05

Asset Quality Ratios

Nonperforming loans to total loans

1.15%

1.22%

Nonperforming assets to total assets

0.75

0.84

Allowance for loan losses to:

Total loans

2.42

2.32

Nonperforming loans

210.89

189.95

(1) Per share data has been restated to give effect to a 2-for-1 stock split effective on January 15, 2004.

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To Our Shareholders:

Reflection On 2004

In my letter to shareholders in the 2003 Annual Report, I noted that we had achieved record earnings for the year, detailed our accomplishments, outlined the challenges facing the Company, and identified our goals for fiscal 2004. As I write today, we have addressed and met the challenges we faced and achieved the goals we had set out for ourselves. Consequently, we again report record earnings, with $31.8 million in net income in 2004, up 14% from 2003, while diluted earnings per share was up over 13%.

Last year, we felt that the compression of our net interest margin would continue and present significant challenges to achieving growth in net earnings. In fact, our margin did decline from 4.09% in 2003 to 3.71% in 2004. As a result in 2003, we identified the need to increase non-interest revenues and reduce non-interest expenses in order to continue providing improved returns for our shareholders. We accomplished each of these goals. Other operating income grew from $17.3 million in 2003, to $21.6 million in 2004, up 25%. Revenue was up in each category, including service fees on deposit accounts, insurance commissions, trust and investment services, and mortgage banking and related fees. Other operating income represented 14.1% of total revenue in 2004, up from 10.3% in 2003.

As other operating income grew, other operating expenses declined by 7%, or $4.5 million. A significant contribution to this decline was the consolidation during fiscal 2004 of four branch offices into other neighboring branches. This consolidation provided us the ability to open two new offices during fiscal 2004 with another planned for the summer of 2004. These new offices in market areas not currently served by the Company should provide the impetus for continued growth in future years. As a result of our expense reductions, the Company’s efficiency ratio improved and was 50.4% in 2004, down from 53.1% in 2003.

The growth in other operating income, the reduction of operating expenses, combined with improved earnings per share, returns on assets and equity, as well as improved credit quality, made 2004 probably the most successful year in the history of the Company.

Reflection On Our Legacy

It is with very mixed emotions that I write this, my final, letter to you. After concluding another year of record earnings, on April 2, 2004, the Company announced that it had reached a definitive agreement to be acquired by First Niagara Bancorp, Inc. (“First Niagara”). The Board approved this merger after significant discussion and consideration of the impact on, and benefits to, our shareholders, our employees, our customers, and the communities we serve.

The Board, senior management, and I firmly believe that the value of your investment in Hudson River will continue to flourish as the legacy that HRBT leaves behind is complemented by First Niagara's commitment to quality customer service and above average shareholder returns.

The legacy that HRBT leaves behind is one that the Board and I look upon with pride and a feeling of accomplishment. From the time of our initial public offering in July 1998, HRBT has grown from 13 branches in four counties to 49 branches in 10 counties today, spanning the entire Capital region.

Total assets have increased from $670 million just prior to our IPO, to $2.6 billion at March 31, 2004. Earnings per share for 2000-our first full year as a public company-were $0.33 - about what we make in a quarter today. Our first dividend was $0.015 in 1999, it’s now $0.08. Our stock price at the time of our IPO at $5 per share has grown to $20.60 at March 31, 2004. These successes were not an accident. They are attributed to the dedication, commitment, and talent of the Company’s senior management and each of our employees.

I would like to extend my appreciation for all the efforts that the Company’s employees have put forth to make HRBT a success. I would also like to thank the Board for its faith in my management team and myself and for the guidance it has provided to us. And finally, I would like to thank the shareholders for the support they have shown since 1998 as we endeavored to build a strong and successful franchise with superior returns…. I believe we succeeded.

/s/ Carl A Florio

President and Chief Executive Officer

June 1, 2004

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Five Year Selected Financial Data

(In thousands, except for share and per share data)

At or for the Years Ended March 31,

2004

2003

2002

2001

2000

Earnings

Interest income

$ 131,980

$150,950

$134,128

$ 91,499

$ 76,423

Interest expense

44,064

56,366

57,361

40,842

30,509

Net interest income

87,916

94,584

76,767

50,657

45,914

Provision for loan losses

4,800

6,000

5,675

5,100

6,200

Other operating income

21,589

17,256

11,406

4,790

2,588

Other operating expense

56,408

60,883

49,179

31,709

27,788

Income before tax expense

48,297

44,957

33,319

18,638

14,514

Tax expense

16,509

17,103

13,790

6,970

4,988

Net income

$ 31,788

$ 27,854

$ 19,529

$ 11,668

$ 9,526

Per Share Data (1)

Basic earnings per share

$ 1.14

$ 1.01

$ 0.71

$ 0.43

$ 0.33

Diluted earnings per share

1.10

0.97

0.69

0.43

0.33

Book value at year end

10.17

9.22

8.33

7.89

7.25

Book value at year end, including

unallocated ESOP shares and

unvested RRP shares

9.49

8.51

7.60

7.07

6.43

Tangible book value at year end

7.68

6.67

5.72

7.47

6.83

Tangible book value, including

unallocated ESOP shares and

unvested RRP shares

7.17

6.16

5.22

6.70

6.05

Closing market price

20.60

11.49

12.07

6.97

5.00

Average Balances and Shares

Total assets

$2,539,372

$2,476,371

$1,901,888

$1,167,944

$ 996,448

Earning assets

2,369,114

2,313,965

1,790,232

1,105,473

950,380

Loans

1,632,233

1,803,606

1,490,547

849,283

698,403

Securities available for sale

519,841

227,300

181,549

230,736

231,931

Securities held to maturity

5,570

14,899

Deposits

1,818,344

1,764,235

1,275,763

737,509

682,029

Borrowings

416,322

428,599

359,865

200,538

85,824

Shareholders' equity

269,206

245,860

225,002

205,336

207,953

Shares outstanding (1):

Basic

27,998,674

27,710,706

27,416,048

27,145,628

29,113,296

Diluted

28,945,749

28,622,448

28,221,584

27,399,482

29,155,484

Financial Ratios

Return on average assets

1.25%

1.12%

1.03%

1.00%

0.96%

Return on average equity

11.81

11.33

8.68

5.68

4.58

Return on average tangible

equity

16.02

16.00

10.62

6.01

4.77

Dividend payout ratio

26.61

24.04

25.38

26.66

19.36

Net interest margin

3.71

4.09

4.29

4.58

4.83

Efficiency ratio (2)

50.39

53.05

51.81

51.94

52.61

Expense ratio (2)

2.17

2.40

2.44

2.56

Equity to assets at year end

10.99

10.35

9.20

17.88

17.46

Tangible equity to tangible assets at

year end

8.53

7.71

6.51

17.10

16.62

Allowance to nonperforming loans

210.89

189.95

203.51

259.96

190.50

Allowance to total loans

2.42

2.32

1.92

2.53

2.38

(1)Share and per share data have been restated to give effect to a 2-for-1 stock split effective January 15, 2004.

(2)Ratio does not include other real estate owned and repossessed property expenses, net securities transactions, net loan transactions, and goodwill amortization and other intangibles amortization for each period. The 2001 ratio excludes pre-tax nonrecurring merger expenses and other nonrecurring expenses.

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Hudson River Bancorp, Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The financial review which follows focuses on the factors affecting the consolidated financial condition and results of operations of Hudson River Bancorp, Inc. and its subsidiaries, Hudson River Bank & Trust Company (the “Bank”) and C. W. Bostwick, Inc. (“Bostwick”) (combined, the “Company”), during the year ended March 31, 2004 and the preceding two years. The consolidated financial statements and related notes as of March 31, 2004 and 2003, and for each of the years in the three year period ended March 31, 2004, should be read in conjunction with this review.

The Company’s primary market area, with 49 full-service branches as of March 31, 2004, is the Capital District region of New York state. The Company has been, and intends to continue to be, a community-oriented financial institution offering a variety of financial services. The Company’s principal business is attracting deposits from customers within its market area and investing those funds in primarily loans, and to a lesser extent, in marketable securities. The financial condition and operating results of the Company are dependent on its net interest income, which is the difference between the interest income earned on its assets, and the interest expense paid on its liabilities, primarily consisting of deposits and borrowings. Net income of the Company is also affected by provisions for loan losses and other operating income, such as fees on deposit related services and insurance commissions; it is also impacted by other operating expenses, such as compensation and benefits, occupancy and equipment expenses, and federal and state income taxes.

The Company’s results of operations are significantly affected by general economic and competitive conditions (particularly changes in market interest rates), government policies, changes in accounting standards and actions of regulatory agencies. Future changes in applicable laws, regulations or government policies may have a material impact on the Company. Lending activities are substantially influenced by the demand for and supply of housing, competition among lenders, the level of interest rates and the availability of funds. The ability to gather deposits and the cost of funds are influenced by prevailing market interest rates, fees and terms on deposit products, as well as the availability of alternative investments, including mutual funds and stocks.

PENDING MERGER WITH FIRST NIAGARA FINANCIAL GROUP, INC.

On April 1, 2004, the Company and First Niagara Financial Group, Inc. (“First Niagara”) entered into a definitive Merger Agreement under which the Company will merge into First Niagara. The Agreement provides that shareholders of the Company will receive either First Niagara stock, cash or a combination of First Niagara stock and cash for each share of Company common stock. The aggregate merger consideration is comprised of approximately 35.7 million shares of First Niagara common stock and approximately $125.0 million in cash. The actual value of the merger consideration to be paid upon closing will depend on the average stock price for First Niagara just prior to the completion of the merger. The mix of cash and stock received by each Hudson River stockholder will also be determined at that time to ensure that each share of Hudson River stock receives equal consideration. The Boards of Directors of the Company and First Niagara expect the transaction to close in January 2005 subject to the receipt of various shareholder and regulatory approvals.

CRITICAL ACCOUNTING POLICIES

To afford users of the Company’s consolidated financial statements assurance that the financial results included are appropriate and can be relied upon, management must select and apply the accounting policies and methodologies that are the most appropriate choices for the Company’s circumstances. The choices management makes are very important to users of the Company’s consolidated financial statements, but some of these choices are more significant than others. Of particular importance, and considered critical, are those accounting policies or methodologies which apply to areas of greater importance, or which involve a greater degree of subjectivity in the decision-making process on the part of management.

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Management of the Company considers the accounting policy relating to the allowance for loan losses to be a critical accounting policy given the inherent subjectivity and uncertainty in estimating the levels of the allowance required to cover probable credit losses inherent in the loan portfolio and the material effect that such judgments can have on the results of operations.

The methodology utilized by management to determine the appropriate level of the allowance for loan losses for commercial and commercial real estate (“CRE”) loans differs from that utilized for other loan types. All commercial and CRE loans are risk rated based upon management’s assessment of the credit quality of each loan. The Company utilizes a risk rating scale from 1 through 7. Loans that are assessed a rating from 1 – 3 are considered “pass” rated loans, while loans rated 4 – 7 are considered adversely rated loans with increasing levels of severity. In assessing the risk rating of a particular loan, factors specific to each borrower are evaluated, including debt capacity and cash flows; past, current, and projected earnings; the size of the loan; the sources of repayment; management strength; and the nature of the borrower’s industry. These factors are based upon available historical information, as well as management’s subjective assessment. Emphasis on a particular factor over another could impact the ultimate risk rating assigned to a loan. Loans that are adversely rated are further evaluated to determine if a specific reserve is necessary. A specific reserve for adversely rated loans that are impaired is based on discounted cash flows using the loan’s effective interest rate, or the fair value of the collateral for collateral-dependent loans, or the observable market price of the impaired loan. Changes in the timing of cash flows or in the fair value of the collateral, could have an adverse impact on the specific reserves estimated by management, and ultimately, on the allowance for loan losses as a whole. For adversely rated commercial and CRE loans for which a specific reserve is not deemed necessary, a general reserve is determined based upon judgment established by management. A general reserve is also determined for other non-commercial loan types that are delinquent. The amount of the judgmentally determined general reserve varies based upon the severity of the delinquency or the loan type. For instance, a general reserve on a delinquent unsecured consumer loan is higher than that of a delinquent residential real estate loan.

For “pass” rated commercial and CRE loans, as well as other loan types that are not delinquent, management estimates general reserves based upon both historical loss experience as well as other specific qualitative factors. Management currently utilizes loss history for the previous 48 months to determine historical loss factors. Changes in the number of months utilized, or if the number of months utilized isn’t considered a complete economic cycle, could adversely impact the level of reserves estimated by management. General reserves based on other specific qualitative factors include trends in delinquencies and nonaccruals; trends in loan volume and terms; local, regional, and national economic trends; loan concentrations; and changes in loan policies or lending staff. Management judgment is involved at many levels of evaluating these trends. The change in a trend, or the emphasis of one particular trend, could have an adverse impact on the amount of allowance estimated by management.

The remainder of the allowance for loan losses that is not allocated to any particular loan type represents management’s opinion that given the complexities of the loan portfolio, the judgment involved in management’s assessment process, and potential adverse economic considerations concerning a particular loan or group of loans of which management is unaware, there are estimable losses that have been incurred but not yet specifically identified, and as a result, are not fully provided for in the allocated portion of the allowance. Although the unallocated portion of the reserve is provided to absorb losses in excess of the amounts allocated to specific loan types, both the allocated and unallocated components are available to absorb losses in any loan type.

The Company’s policy relating to the allowance for loan losses is disclosed in note 1 to the consolidated financial statements which begins on page 26. All accounting policies are important, and as such, the Company encourages the reader to review each of its policies included in note 1 to obtain a greater understanding of how the Company’s financial performance is recorded and reported.

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MERGER AND ACQUISITION ACTIVITY

On March 8, 2002, the Company completed its acquisition of Ambanc Holding Co., Inc. (“Ambanc”) paying $21.50 per share in cash for each share of Ambanc common stock outstanding (the “Ambanc Acquisition”). The total consideration of approximately $100.5 million was funded primarily through the usage of the Company’s Federal funds sold. Goodwill associated with this transaction approximated $25.9 million. In accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 142, goodwill acquired after June 30, 2001 is not amortized but is instead evaluated at least annually for impairment. The Company also recorded a core deposit intangible asset associated with the transaction of $6.8 million. The core deposit intangible is being amortized over its estimated useful life of approximately ten years on an accelerated basis. Ambanc had total assets of $654.1 million and total deposits of $480.9 million as of March 8, 2002.

On April 20, 2001, the Company completed its acquisition of Cohoes Bancorp, Inc. (“Cohoes”) paying $19.50 per share in cash for each share of Cohoes common stock outstanding (“the Cohoes Acquisition”). The total consideration of approximately $151.0 million was funded through the sale of securities and loans held for sale, and by long-term FHLB borrowings. Goodwill associated with this transaction approximated $31.0 million and was initially being amortized over twenty years on a straight line basis through March 31, 2002. Upon the Company’s adoption of the remaining provisions of SFAS No. 142 as of April 1, 2002, this goodwill is no longer amortized but is instead evaluated at least annually for impairment. Cohoes had total assets of $705.4 million and total deposits of $502.1 million as of April 20, 2001.

OVERVIEW

The Company earned net income for the year ended March 31, 2004, amounting to $31.8 million, or $1.10 diluted earnings per share, compared with the $27.9 million, or $0.97 diluted earnings per share, earned during the year ended March 31, 2003 and $19.5 million, or $0.69 diluted earnings per share, for the year ended March 31, 2002. All share and per share information has been restated to give effect to the 2-for-1 stock split which was effective on January 15, 2004. The increase in 2004 net income over the prior year results was a result of higher other operating income, lower other operating expenses, lower provision for loan losses and lower tax expense, partially offset by a decrease in net interest income. For the year ended March 31, 2004, the Company’s return on average assets was 1.25%, up from 1.12% in 2003. The Company’s return on average equity for the year ended March 31, 2004 was 11.81%, up from 11.33% in 2003. The Company’s return on average tangible equity for the year ended March 31, 2004 was 16.02%, up from 16.00% in 2003. Net income for 2003 as compared to the year ended March 31, 2002 was enhanced primarily by the Company’s Ambanc Acquisition in March 2002. The acquired company’s results of operations were included in the Company’s results from the date of acquisition forward.

ASSET/LIABILITY MANAGEMENT

The Company attempts to maximize net interest income, and net income, while actively managing its liquidity and interest rate sensitivity through the mix of various core deposits and other sources of funds, which in turn, fund an appropriate mix of earning assets. The changes in the Company’s asset mix and sources of funds, and the resultant impact on net interest income are discussed below.

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Average Balances, Interest and Yields

Years Ended March 31,

2004

2003

2002

Average

Yield/

Average

Yield/

Average

Yield/

(Dollars in thousands)

Balance

Interest

Rate

Balance

Interest

Rate

Balance

Interest

Rate

Earning assets

Money market investments

$ 19,085

$ 210

1.10%

$ -

Federal funds sold

177,999

2,009

1.13

261,920

4,012

1.53

98,377

2,347

2.39

Loans held for sale

1,321

6.74

Securities available for sale (1)

519,841

17,963

3.46

227,300

11,718

5.16

181,549

11,368

6.26

Federal Home Loan Bank

of New York stock

19,956

426

2.13

21,139

982

4.65

18,438

926

5.02

Loans (2)

1,632,233

111,372

6.82

1,803,606

134,238

7.44

1,490,547

119,398

8.01

Total earning assets

2,369,114

131,980

5.57

2,313,965

150,950

6.52

1,790,232

134,128

7.49

HUDSON RIVER BANCORP INC 10-K/A