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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

OR

Commission File Number: 000-24811

SOUND FEDERAL BANCORP, INC.

(Exact Name of Registrant as Specified in its Charter)

(914) 761-3636

(Registrant’s Telephone Number including area code)

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 $.10 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 requirements for the past 90 days.  YES  x  NO  ¨

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. ¨

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).  YES  x  NO  ¨

As of June 16, 2003, there were issued and outstanding 13,247,133 shares of the Registrant’s Common Stock. The aggregate value of the voting stock held by non-affiliates of the Registrant, computed by reference to the average bid and asked prices of the Common Stock as of June 16, 2003 ($13.06) was $148,034,248.

DOCUMENTS INCORPORATED BY REFERENCE

1. Sections of Annual Report to Stockholders for the fiscal year ended March 31, 2003 (Parts II and IV).

2. Proxy Statement for the 2003 Annual Meeting of Stockholders (Parts I and III).

PART I

ITEM 1. BUSINESS

General

Sound Federal Bancorp, Inc. Sound Federal Bancorp, Inc. is a Delaware corporation which was organized in 2002 and is the successor to Sound Federal Bancorp, a federal corporation. In January 2003, Sound Federal Bancorp, Inc. became the holding company parent of Sound Federal Savings following the completion of the “second step” mutual-to-stock conversion of Sound Federal Bancorp, MHC. Reference is made to “Sound Federal Bancorp, Inc.” or the “Company” for periods both before and after the second step conversion. The principal asset of the Company is its investment in Sound Federal Savings (the “Bank”). As a result of the second step conversion, the Company raised $70.1 million in net proceeds, of which $31.8 million was retained as capital by the Company and $38.3 million was infused as capital into the Bank. Shareholders of the Company immediately prior to the completion of the second step conversion received 2.7667 shares for each share of common stock they held in the Company. In addition, the Company sold 7,780,737 shares resulting in net proceeds of $70.1 million. Principally as a result of the second step conversion, the Company had 13,247,133 shares issued and outstanding at March 31, 2003. At March 31, 2003, the Company had total consolidated assets of $796.1 million, total deposits of $604.3 million, and total stockholders’ equity of $138.3 million.

The second step conversion was accounted for as a change in corporate form with no subsequent change in the historical carrying amounts of the Company’s assets and liabilities. Consolidated stockholders’ equity increased by the net cash proceeds from the offering. All references in the consolidated financial statements and notes thereto to share data (including the number of shares and per share amounts) have been adjusted to reflect the additional shares outstanding as a result of the offering and the share exchange.

Sound Federal Savings. The Bank is a federally chartered savings association headquartered in White Plains, New York. The Bank’s deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”). The Bank was organized as a New York chartered savings bank in 1891 and became a federally chartered savings association in 1934. In October 1998, Sound Bancorp issued shares of its common stock in connection with a Plan of Reorganization (the “Initial Reorganization”) and related Subscription and Community Offering (the “Initial Offering”). In the Initial Reorganization, Sound Federal Savings and Loan Association converted from a federally-chartered mutual savings association to a federally-chartered stock savings association. In July 2000, the Company and the Bank completed the acquisition of Peekskill Financial Corporation and its wholly owned subsidiary, First Federal Savings Bank (“Peekskill”) (the “Acquisition”). In connection with the second step conversion in January 2003, the Bank changed its name to Sound Federal Savings. At March 31, 2003, the Bank operated from ten locations in New York and Connecticut.

The Company’s principal executive office is located at 1311 Mamaroneck Avenue, White Plains, New York 10605, and its telephone number at that address is (914) 761-3636.

The Company’s Form 10-K and Annual Report are available on the Company’s website at www.soundfed.com.

Market Area

The Bank is a community-oriented financial institution that offers a variety of financial products and services from its main office and branch offices. The Bank’s primary lending areas are the New York

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counties of Westchester and Rockland, and Fairfield County, Connecticut. Most of the Bank’s deposit customers are residents of Westchester County. The Bank also obtains deposits from persons in Rockland County and Fairfield County. The Bank’s market area consists of middle income and upper income communities. The local economy is not dependent upon any single employer, but rather is affected by the general economy of the New York City metropolitan area.

Lending Activities

Historically, the Bank’s principal lending activity has been the origination of fixed-rate first mortgage loans for the purchase or refinancing of one-to-four family residential real property. In fiscal 2002, the Bank began to originate adjustable-rate mortgage loans with fixed-rates for initial terms of three, five and seven years. After the initial terms, the interest rate on the loans adjusts annually. The Bank has thus far retained all loans that it has originated. One-to-four family residential mortgage loans represented $343.6 million, or 80.2%, of the Bank’s loan portfolio at March 31, 2003. Home equity lines of credit represented $44.4 million, or 10.4%, of the Bank’s loan portfolio at March 31, 2003. The Bank also offers multi-family mortgage loans, commercial mortgage loans and construction loans. Multi-family mortgage loans totaled $7.1 million, or 1.7% of the loan portfolio, at March 31, 2003. Commercial mortgage loans totaled $27.9 million, or 6.5% of the loan portfolio, at March 31, 2003. Construction loans totaled $4.1 million, or 0.9% of the loan portfolio, at March 31, 2003. The Bank also makes consumer loans, which primarily consist of secured personal loans and automobile loans. Consumer loans totaled $1.6 million, or 0.3% of the loan portfolio, at March 31, 2003.

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Loan Portfolio Composition. The following table sets forth the composition of the Bank’s loan portfolio by type of loan at the dates indicated.

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The following table sets forth the composition of the Bank’s loan portfolio by fixed and adjustable rates at the dates indicated.