Edgar Filing: GOUVERNEUR BANCORP INC

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

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GOUVERNEUR BANCORP, INC.
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GOUVERNEUR BANCORP, INC.

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42 Church Street
Gouverneur, New York 13642
(315) 287-2600

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PROXY STATEMENT
WITH NOTICE OF ANNUAL MEETING

GENERAL INFORMATION AND NOTICE OF MEETING

Gouverneur Bancorp, Inc., the holding company for Gouverneur Savings
and Loan Association, will be holding its annual meeting of stockholders on
February 14, 2005. The meeting will be held at the Executive Offices of
Gouverneur Savings & Loan Association, 26 John Street, Gouverneur, New York
13642, beginning at 10:00 a.m. A proxy card is included with this Proxy
Statement.

At the meeting, we will ask stockholders to consider and vote upon:

I. The election of two members to our Board of Directors to serve
for three-year terms and until their successors have been duly
elected and qualified;

II. The ratification of the appointment of Beard Miller Company
LLP as independent public accountants for the Company for the
fiscal year ending September 30, 2005; and

such other matters as may properly come before the meeting or any adjournments
thereof. The Board of Directors is not aware of any other business to come
before the meeting.

The Board of Directors is soliciting your proxy to vote at the meeting
and at any adjournments of the meeting. Please complete the enclosed proxy card
and return it in the enclosed return envelope as soon as possible. Each of our
stockholders has one vote for each share of common stock owned. On the election
of directors, each stockholder may vote for up to two directors, but may not
cast more votes for any one nominee than the number of shares owned by that
stockholder.

Stockholders of record on December 29, 2004 are entitled to receive
notice of the meeting and are entitled to vote at the meeting, or at an
adjournment of the meeting. This is known as the "Record Date." Please read this
Proxy Statement carefully before you decide how to vote. We encourage you to
return the proxy card even if you plan to attend the meeting. This will save us
additional expense in soliciting proxies and will ensure that your vote is
counted. You may still vote in person at the meeting even if you return the
proxy card.

On the Record Date, there were 2,284,234 shares of Gouverneur Bancorp,
Inc. common stock, par value $.01 per share, issued and outstanding.

In this Proxy Statement, the terms "Company," "we," "our," "us," or
similar terms refer to Gouverneur Bancorp, Inc. References to the "Bank" mean
Gouverneur Savings and Loan Association, our wholly owned subsidiary.

Your Board of Directors unanimously recommends that you vote "FOR" the
director nominees described in this Proxy Statement and the ratification
of the independent public accountants.

This Proxy Statement and Notice of Annual Meeting is first
being made available to stockholders on or about January 12, 2005.

IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE US THE EXPENSE OF FURTHER
REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. WE HAVE ENCLOSED A SELF
ADDRESSED ENVELOPE WHICH YOU CAN USE TO RETURN YOUR PROXY CARD. NO POSTAGE IS
REQUIRED IF YOU MAIL THE ENVELOPE IN THE UNITED STATES.

Voting and Proxy Cards

If you sign and return a proxy card in the form which the Board of
Directors is soliciting so we receive it before the polls close at the meeting,
your votes will be cast as you have marked on the proxy card, unless you revoke
your proxy before the polls close. If you properly sign and return our proxy
card but you do not mark on it how you want to vote on any matter, then the
Board of Directors, as your proxy, will vote your shares in favor of the
nominees for director named in this Proxy Statement and the ratification of the
appointment of Beard Miller Company LLP as the independent public accountants.
If any stockholder properly presents any other matter for a vote, including a
proposal to adjourn the meeting, the Board of Directors as the holder of your
proxy may vote on those matters based on its judgment. We do not know of any
other matters that stockholders may present for a vote at the meeting.

If you sign and return the enclosed proxy card, you may revoke it at
any time before the polls are closed. If you want to revoke your proxy card, you
must: (i) sign and deliver a written notice to the Secretary of the Company, at
or before the meeting, dated after the date of your proxy stating that you want
to revoke the proxy; (ii) sign and deliver to the Secretary of the Company at or
before the meeting another proxy card relating to the same shares with a later
date; or (iii) attend the meeting and vote in person. Attending the meeting does
not automatically revoke a proxy unless you also take one of the three actions
described in the prior sentence. Any written notice revoking a proxy must be
delivered to Charles VanVleet, Secretary, Gouverneur Bancorp, Inc., 42 Church
Street, Gouverneur, New York 13642.

Quorum. If 1,142,118 shares of our common stock are present in person
or represented by proxy at the meeting, there will be a quorum which will allow
the meeting to commence. Once a quorum is present, the meeting can continue even
if some stockholders leave the meeting. If a stockholder is present in person or
by proxy but abstains from voting any shares, or if a broker submits a proxy for
shares but does not vote those shares, then the shares are counted as present
for purposes of determining a quorum.

Required Vote. A plurality of the votes cast is required to elect
directors under Proposal I. This means that the nominees for each directorship
who receive the most votes will be elected. Abstentions and broker non-votes
will not be counted for or against any of the nominees and will have no effect
on the outcome of this proposal.

The affirmative vote of the holders of a majority of the shares of our
common stock represented in person or by proxy at the meeting is required to
ratify the appointment of our independent public accountants under Proposal II.
Abstentions will be counted as votes against the proposal and broker non-votes
will have no effect on the outcome of this proposal.

The affirmative vote of the holders of a majority of the shares of our
common stock represented in person or by proxy at the meeting is required to
approve any other proposal, unless our bylaws, our charter or any law that
applies to the Company requires a different vote. Our bylaws provide that, at an
annual meeting, a stockholder may nominate a person for election as a director
only if advance notice of intent to nominate the person is given to the Company.
The notice must be received by the Company at least five days before the date of
the meeting. Our bylaws require similar advance notice if a stockholder wants to
make any other proposal at an annual meeting of stockholders.

Vote By Cambray MHC. Cambray MHC is the beneficial owner of 1,311,222
shares, or 57.40% of the Company's issued and outstanding common stock. Cambray
MHC will vote all of the shares of the common stock it owns in accordance with
the instructions of its Board of Directors, which is comprised of the same
individuals who serve as directors of the Bank and the Company. We expect that
Cambray MHC will vote such shares in favor of 1 both Proposals. Since Cambray
owns more than 50% of the outstanding shares of the Company's common stock, we
expect that it will control the outcome of both Proposals.

Important Information for Stockholders Whose Stock Is Held in Street Name

If you hold your stock in street name, which means that your stock is
held for you in a brokerage account and is not registered on our stock records
in your own name, please tell your broker as soon as possible how to vote your
shares to make sure that your broker votes your shares before the polls close at
the meeting. If your stock is held in street name, you do not have the direct
right to vote your shares or revoke a proxy for your shares unless your broker
gives you that right in writing.

PRINCIPAL OWNERS OF OUR COMMON STOCK

The following table provides you with information, to the best of our
knowledge, about stock ownership by directors, executive officers, and any
person or group known by us to own beneficially more than 5% of our outstanding
common stock. In general, beneficial ownership means a person's ownership of
shares that a person has the power to vote, sell or otherwise dispose of and
which a person has a right to acquire (such as through the exercise of stock
options) within sixty days of the date of the preparation of this table. The
information is as of the Record Date. We know of no one person or group, other
than as listed below, who beneficially owned more than 5% of our common stock as
of the Record Date. Information about persons or groups who own beneficially
more than 5% of our common stock is based on filings with the Securities and
Exchange Commission ("SEC") on or before the Record Date.

Shares Beneficially Owned Percent of total shares
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Beneficial Owner at December 29, 2004(1) outstanding(2)
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Cambray Mutual Holding Company 1,311,222 57.40%
42 Church Street, Gouverneur, New York 13642

Millennium Partners LP 127,800 5.59%
666 Fifth Avenue, New York, New York

Frank Langevin, Chairman of the Board 36,300 1.59%

Richard F. Bennett, President and 63,938(3) 2.80%
Chief Executive Officer and Director

Richard E. Jones, Director 8,300(4) *

Robert J. Leader, Director 37,300 1.63%

Timothy J. Monroe, Director 8,300 *

Joseph C. Pistolesi, Director 11,130 *

Larry Straw, Director 21,300 *

Directors and Executive Officers of the Company, 218,127(5) 9.55%
as a group (11 persons)

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(1) The amount reported represents shares held directly, as well as shares
allocated to participants in our Employee Stock Ownership Plan ("ESOP") and
other shares with respect to which a person may be deemed to have sole or shared
voting or investment power. A total of 7,935 shares were allocated to ESOP
participants in fiscal 2004, of which 3,716 shares were allocated to executive
officers as a group. Unallocated shares and allocated shares for which no voting
instructions are received are voted in the same proportion as allocated shares
voted by ESOP participants. The amount reported also includes 2,400 unvested MRP
shares awarded to executive officers as a group which will vest in equal amounts
on April 23, 2005, 2006 and 2007. These unvested MRP shares may be voted by the
recipients at the meeting. Also includes 30,250 stock options granted to
executive officers and 21,150 options granted to non-employee directors under
the SOP which have not been exercised, representing options exercisable on the
Record Date or within 60 days thereafter.
(2) Based upon 2,284,234 shares outstanding on the Record Date. An asterisk
("*") means that the percentage is less than 1%.
(3) Includes 7,088 shares allocated to Mr. Bennett in the ESOP. Includes 6,600
shares owned by Mr. Bennett's spouse in an Individual Retirement Account, as to
which Mr. Bennett disclaims beneficial ownership.
(4) Includes 1,000 shares owned by Mr. Jones' spouse, as to which Mr. Jones
disclaims beneficial ownership.
(5) Includes 9,159 shares allocated to four executive officers in the ESOP.
--------------------------

I. THE ELECTION OF DIRECTORS

Our Board of Directors presently has seven members, and as provided in
the Company's bylaws, it is divided into three classes, with each class of
directors being elected for three-year terms.

At this meeting, stockholders will elect two directors. The Board of
Directors has nominated Robert J. Leader and Larry Straw for election as
directors. Stockholders elect directors at the meeting by a plurality of the
votes cast, which means that the two nominees with the highest vote totals will
be elected. There is no cumulative voting in the election of directors, which
means that no stockholder may cast more votes in favor of any one nominee than
the number of shares owned of record by that stockholder.

Each person who the stockholders elect at the meeting will serve for a
three year term of office which expires at the annual meeting of stockholders to
be held in the year 2008 and until their successors are elected and qualify.
Both of the nominees named below have consented to being named in this Proxy
Statement and to serve, if elected. If either nominee becomes unavailable for
election for any presently unforeseen reason, the Board of Directors, as the
holder of your proxy, will have the right to use its discretion to cast your
votes for a substitute.

The Board of Directors and Nominees

We are providing the following information regarding the nominees and
other directors who will continue in office after the meeting. There are no
arrangements or understandings by which any director was selected to serve as
such. All directors of the Company are also directors of the Bank. There are no
family relationships among directors and executive officers of the Company and
the Bank. Ages are as of the Record Date. All directors and nominees have been
directors since the Company was formed in March 1999, except for Mr. Monroe and
Mr. Pistolesi who were both elected as directors in May 1999.

Nominees

Robert J. Leader, age 71, has been a Partner in Case & Leader LLP, a
law firm in Gouverneur, New York, since 1966. Mr. Leader has served as Chairman
of the Board (and currently as Trustee) of the Gouverneur EJ Noble Hospital;
Secretary and Trustee of North Country Hospitals; President (and currently as
Director) of Kinney Nursing Home Co., Inc.; and as a Director of B-S Industrial
Contractors, Inc. Mr. Leader has served as counsel to the Villages of Gouverneur
and Hermon; the Towns of Fowler, Pitcairn, Rossie and Edwards and the Gouverneur
Central School. Mr. Leader is a member and past President of the Gouverneur
Rotary Club and past President of the Gouverneur Development Corporation.

Larry Straw, age 53, has been a Project Manager for Cives Steel Co.,
Northern Division, a steel fabrication company, since August 1999. He was
previously Vice President and Division Manager of the Balmat Mining Division of
Zinc Corporation of America.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS VOTE IN FAVOR OF THESE TWO NOMINEES

Continuing Directors

The following persons are existing directors whose terms of office will
continue after the meeting. Ages are as of the Record Date.

Richard F. Bennett, age 60, has been the President and Chief Executive
Officer of the Bank since 1988 and has held the same positions with the Company
since its formation in March 1999. Mr. Bennett joined the Bank in December 1986.

Mr. Bennett is a Director of the Community Bankers Association of New York State
and was formerly chairman of its Regional Group II. Mr. Bennett serves as a
director on two hospital boards, EJ Noble Hospital in Gouverneur and the River
Hospital in Alexandria Bay. Mr. Bennett is a Trustee of the St. James Parish
Council, was a member of the Gouverneur Rotary Club and has served as a member
of the board of directors of a local non-profit organization that provides
rehabilitation financing for low-income housing. His term as a director of the
Company expires in 2006.

Richard E. Jones, age 63, is the retired owner of J & H Feed and Farm
Store, which he operated from 1978 until 2002. He is active in the Gouverneur
Elks Lodge. His term as a director of the Company expires in 2007.

Frank Langevin, age 71, has been Chairman of the Board since February
2001. He was, until his retirement in 1993, the owner and operator of P.A.
Langevin Inc., a commercial buildings contracting company. Mr. Langevin is a
Director of the Gouverneur Country Club and was a member of the Gouverneur
Central School Board of Education for 17 years. His term as a director of the
Company expires in 2007.

Timothy J. Monroe, age 52, is a veterinarian in private practice in
Gouverneur and the proprietor of the Northland Veterinary Hospital. Mr. Monroe
is also an elected councilman on the Town Council in Gouverneur; Chairman of the
Board of Gouverneur EJ Noble Hospital and a member of the Board of Directors of
a local public television station. His term as a director of the Company expires
in 2006.

Joseph C. Pistolesi, age 56, is the owner and operator of the Clearview
Motel in Gouverneur. He is also the owner of Pistolesi Rentals, a company
engaged in the ownership and rental of real estate in the Gouverneur area. Mr.
Pistolesi is a member and the former President of the St. Lawrence County Hotel
and Restaurant Association. His term as a director of the Company expires in
2006.

Executive Officers Who Are Not Directors

The Board of Directors elects executive officers for one-year terms and
they serve at the pleasure of the Board. Provided below is certain information
regarding the executive officer of the Company and the Bank who is not a
director. Their ages are as of the Record Date.

John L. Bartlett, age 40, was an Assistant Vice President with the Bank
from August 1998 to February 2001 and has been a Vice President with the Bank
since February 2001. Mr. Bartlett previously held the position of President and
Chief Executive Officer of Citizens National Bank of Hammond from June 1993
until July 1998.

Kathleen F. McIntosh, age 56, has been Treasurer of the Bank since
January 1990 and has held the same position with the Company since its formation
in March 1999. Ms. McIntosh has been employed at the Bank since December 1988.

Robert J. Twyman, age 57, has been the Chief Financial Officer of the
Bank and the Company since October 1999 and a Vice President since February
2001. Mr. Twyman previously held the position of Vice President and Comptroller
of First National Bank of Northern New York from March 1989 until October 1999.

Charles C. VanVleet, age 46, was an Assistant Vice President with the
Bank from August 1996 to February 2001 and held the same position with the
Company from its inception until February 2001. Since February 2001 he has been
a Vice President with the Bank and the Company. Mr. VanVleet has been Secretary
of the Bank and Company since 1999. Mr. VanVleet previously held the position of
Assistant Vice President with First National Bank of Northern New York from May
1987 until August 1996.

Meetings of the Board of Directors and Certain Committees

Our Board of Directors held twelve meetings during fiscal 2004. The
Board of Directors has an Audit Committee and a Personnel Committee.

Our Board of Directors does not presently have a nominating committee.
The entire Board of Directors acts as a nominating committee for the purpose of
identifying, nominating and recruiting directors for election at the
stockholders' meetings. This acting committee, which does not operate under a
charter, meets the independence requirement of the American Stock Exchange
("AMEX") listing standard which is applicable to the Company.

The acting nominating committee (or any nominating committee of the
Company which may hereafter be established) will consider persons recommended by
stockholders of record entitled to vote for the election of directors if timely
written notice, in proper form, of the intent to make a nomination at a meeting
of stockholders, is received by the Company, in accordance with its bylaws and
applicable law. A copy of the Company's bylaws is available to all stockholders
of record upon request. Stockholders who wish to suggest qualified candidates
should write to: Gouverneur Bancorp, Inc., Attention: Corporate Secretary, 42
Church Street, Gouverneur, New York 13642. All recommendations should state in
detail the qualifications of such persons for consideration and should be
accompanied by an indication of the nominee's willingness to serve, if elected.

Our Audit Committee, which met five times during fiscal 2004, consists
of all directors except Mr. Bennett, with Mr. Langevin as Chairman. The Audit
Committee is directly responsible for the appointment, compensation and
oversight of the Company's independent public accountants. It has the authority
to engage separate legal counsel and other advisors, as necessary to execute its
duties. To fulfill its responsibility, the committee oversees matters related to
the accounting, bookkeeping and auditing functions of the Company and meets
periodically with the Company's independent public accountants to arrange for
the audit of the Company's annual financial statements and to review and
evaluate recommendations made during the annual audit. The Audit Committee also
reviews, approves and supervises the internal auditing procedures of the
Company. Under the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), the
Audit Committee must adopt procedures for the receipt, retention and treatment
of complaints received by the Company regarding accounting, internal control and
audit matters, and the anonymous, confidential submission by the Company's
employees of concerns regarding questionable accounting and audit matters.

Our Personnel Committee, which met twice during fiscal 2004, consists
of all directors except Mr. Bennett, with Mr. Langevin as Chairman. The
committee functions on compensation matters for the Company. The committee is
also responsible for overseeing the Company's activities related to the ESOP,
and for administering and making awards under the SOP and the MRP.

Report of the Audit Committee

In fulfillment of the SEC's requirements for disclosure in proxy
materials relating to the functioning of audit committees, the Company's Audit
Committee has prepared the following report for inclusion in this Proxy
Statement.

The Audit Committee is governed by a Charter, which specifies, among
other things, the scope of its responsibilities and how those responsibilities
are to be performed. The Charter is reviewed on an annual basis, and may be
modified to reflect recent law changes and regulatory proposals under the
Sarbanes-Oxley Act. In accordance with the rules of the AMEX, the listing
standard applicable to the Company, the Audit Committee is comprised of the
requisite number of members who are "independent" as defined by that listing
standard.

In the performance of its obligations required by the SEC, the Audit
Committee has: (i) reviewed and discussed the audited consolidated financial
statements with management; (ii) discussed with the independent public
accountants the matters required to be discussed by Statement on Auditing
Standards No. 61, as may be modified or supplemented; and (iii) received from
the auditors disclosures regarding the auditors' independence required by
Independence Standards Board Standard No.1, as may be modified or supplemented,
and discussed with the auditors the auditors' independence.

Based on the above, the Audit Committee recommended to the Company's
Board of Directors that the audited consolidated financial statements be
included in the Company's Annual Report on Form 10-KSB for the fiscal year ended
September 30, 2004 for filing with the SEC.

The Audit Committee has also reviewed and discussed the fees paid to
its independent public accountants during the last two fiscal years for audit
and non-audit services, which are set forth in this proxy statement under the
heading "Independent Auditors' Fees" and has considered whether the provision of
the non-audit services is compatible with the firm's independence and has
concluded that it is.

This report is included herein at the direction of the members of the
Audit Committee, directors Langevin (Chairman), Jones, Leader, Monroe, Pistolesi
and Straw.

Audit Committee Financial Expert

The members of the audit committee have experience in assessing the
performance of companies, gained as members of the Company's Board of Directors
and audit committee, as well as by serving in various capacities in other
companies or governmental agencies. As a result, they each have an understanding
of financial statements. However, none of them keep current on all aspects of
generally accepted accounting principles. Accordingly, the Board does not
consider any of them to be a financial expert as that term is defined in
applicable regulations. Nevertheless, the Board of Directors believes that they
competently perform the functions required of them as members of the audit
committee.

Independent Auditors' Fees

Preapproval Policies and Procedures

In accordance with rules adopted by the Securities and Exchange
Commission in order to implement requirements of the Sarbanes-Oxley Act and the
Audit Committee's charter, all audit and audit-related services and all
permitted non-audit work performed by the independent accountants, Beard Miller
Company LLP, must be pre-approved by the Audit Committee, including the proposed
fees for such work. The Audit Committee has adopted policies and procedures
pursuant to which audit, audit-related and tax services, and all permissible
non-audit services, are pre-approved, and is informed of each service actually
rendered that was approved through its pre-approval process.

Audit Fees. The aggregate fees of Beard Miller Company LLP for the
audit of the Company's consolidated financial statements at and for the years
ended September 30, 2004 and September 30, 2003 and the reviews of the interim
consolidated financial statements included in the Company's Forms 10-QSB for the
quarterly periods in fiscal 2004 and fiscal 2003, the Annual Report on Form
10-KSB and the Annual Report to Stockholders, including out-of-pocket expenses,
were $50,481 and $46,759, respectively.

Audit-related fees. There were no audit-related fees paid to Beard
Miller Company LLP in either of the past two fiscal years.

Tax fees. There were no tax services rendered by the Company's
independent accountants and therefore no fees were paid in either of the past
two fiscal years.

All Other Fees. There were no other services rendered by Beard Miller
Company LLP in either of the past two fiscal years, and therefore no fees were
paid.

COMPENSATION

Directors' Compensation

Directors receive an annual retainer of $4,800, plus $400 for each Bank
Board of Directors' meeting they attend. Non-employee directors also receive
$100 for each committee meeting they attend. Messrs. Bennett, Leader, Jones and
Pistolesi defer all or part of their director fees through the Gouverneur
Savings and Loan Association Voluntary Deferred Compensation Plan for Trustees
in which investments may be made into a variety of mutual funds offered by RBC
Dain Rauscher. There is currently no separate compensation paid for meetings of
the Board of Directors of the Company. All of the directors are also eligible to
participate in the Company's SOP and MRP, and Mr. Bennett may also participate
in the Company's other compensation plans. All of the directors of the Company
are also directors of the Bank.

Voluntary Deferred Compensation Plan for Trustees

The Voluntary Deferred Compensation Plan for Trustees (the "Deferred
Compensation Plan") provides that a Bank director may elect to defer all or part
of his annual director fees to the Deferred Compensation Plan. Currently,
Directors Bennett, Jones, Leader and Pistolesi are deferring director fees
pursuant to this plan. The deferred amounts are held in an individual account
for each participant and are invested in a variety of mutual funds offered by
RBC Dain Rauscher. Amounts deferred under this plan are distributed at a time
and manner determined by each participant, except for certain specified payment
dates upon a participant's termination as a director or upon reaching a certain
age. The Deferred Compensation Plan also provides methods of distribution in the
event of the death of a participant, a hardship faced by a participant (eg.
financial difficulty resulting from a sudden illness), as well as upon a change
in control of the Bank. Beginning in fiscal 2002, the Bank commenced
contributing a monthly amount of $1,500.00 into Mr. Bennett's deferred
compensation account, representing an additional incentive arrangement. This
contribution was eliminated during fiscal 2004 when the Bank-owned Life
Insurance program ("BOLI") was established. This program will provide Mr.
Bennett, and other officers of the Bank, with supplemental retirement benefits.

Executive Officer Compensation

None of our officers receives compensation directly from the Company.
Their compensation is paid by the Bank. We do not expect that we will pay
separate compensation to officers or employees unless and until we engage in
material business activities separate from the Company's ownership of the Bank.

The following table includes information about compensation paid to Mr.
Bennett, who was the only executive officer of the Company or the Bank with
total salary and bonus in excess of $100,000 in fiscal 2004.

Summary Compensation Table

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Annual Compensation Long-Term Compensation Awards
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Options/Stock
Other Annual Restricted Appreciation All Other
Name and Principal Fiscal Salary Bonus Compensation(1) Stock Awarded Rights Compensation(5)
Position Year ($)(2),(3) ("SARs")(#)(4)
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Richard F. Bennett, 2004 $127,000 $12,700 None None None $52,076
President and Chief 2003 $124,000 $12,400 None None None $25,086
Executive Officer 2002 $118,000 $11,800 None None None $30,894
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(1) Mr. Bennett did not receive additional benefits or perquisites totaling more
than 10% of salary and bonus.
(2) On September 30, 2004, Mr. Bennett had 10,500 shares of formerly restricted
stock with a value of $49,875, based upon a closing market price of $4.75 on the
date of the grant. All of those shares are vested.
(3) Pursuant to the MRP, the payment of dividends declared or paid on restricted
stock is deferred during the restricted period and credited to the participant's
account. Payment of deferred dividends, together with accrued interest, is made
upon the earlier to occur of the lapsing of the restriction (i.e., vesting of
the award), death or disability of the participant.
(4) On September 30, 2004, Mr. Bennett had options to purchase 26,750 shares of
common stock pursuant to the SOP. All of those options are vested.
(5) Other Compensation includes: (i) the Bank's matching contribution under its
401(k) Plan of $6,350 in fiscal 2004, $6,200 in fiscal 2003, and $12,000 in
fiscal 2002; (ii) the Bank's contribution of $7,500 in fiscal 2004, $18,000 in
fiscal 2003 and $18,000 in fiscal 2002 to Mr. Bennett's deferred compensation
account, (iii) life and disability insurance premium payments of $893 in fiscal
2004, $886 in fiscal year 2003 and $894 in fiscal year 2002 and (iv) the Bank's
accrued liability expenses of $35,688 and $1,645 for Mr. Bennett's Supplemental
Executive Retirement Plan benefit and Directors Retirement Plan benefit,
respectively, for plans adopted during fiscal 2004.

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

Employee Benefit Plans

401(k) Plan. The Bank maintains a tax-qualified savings and profit
sharing plan under Section 401(k) of the Internal Revenue Code of 1986, as
amended (the "Code"). Salaried employees with at least one year of service who
are at least age 21 and have completed at least 1,000 hours of service may make
pre-tax salary deferrals and after tax contributions under the 401(k) Plan. The
Bank contributes 3% of base salary for each employee participating in the 401(k)
Plan without regard to any employee matching contribution. Participating
employees may make voluntary contributions to the 401(k) Plan up to 15% of their
base salary. The Bank may, from time to time, make additional voluntary
contributions. Employees are fully vested in their salary deferrals and after
tax contributions, and are gradually vested in the Bank's contribution after one
year of service and fully vested after six years.

Bank Owned Life Insurance Plan. In January 2004, we established a BOLI
plan to replace current life insurance coverage and provide additional coverage
for certain employees, provide supplemental retirement for certain employees and
provide a retirement plan for directors. The bank purchased $3.5 million in bank
owned life insurance to fund the plan.

The Supplemental Executive Retirement Plan. In January 2004, we
established the supplemental executive retirement plan. The plan will provide a
target benefit equal to 70% of each participant's final average annual
compensation after completing twenty years of cumulative service, offset by 50%
of Social Security benefits, as well as Profit Sharing, ESOP and 401(k)
contributions. Employees partially vest after completing ten years of cumulative
service. Employees may retire with full benefit at age sixty-five, or retire
with a reduced benefit starting at age sixty-two.

The Directors Retirement Plan. In January 2004, we established the
directors retirement plan. The plan provides a target benefit equal to 70% of
each director's final average board fees. Directors may retire with a full
benefit at age seventy-five and ten years of service, or retire with a reduced
benefit starting at age sixty-five with twenty years of service.

The Executive Life Insurance Plan. In January 2004, we established the
executive life insurance plan in which our executive officers and certain
employees participate. Split dollar life insurance provides for the joint
purchase of a life insurance policy between an employer and an employee under
which the policy benefits and costs are split between the parties. Each policy
is written in an amount in excess of the two times salary required as coverage
for each employee, with the Bank named as beneficiary on the balance of the
coverage. The participant retains rights under this plan in certain
circumstances after retirement or termination of employment.

Employee Stock Ownership Plan. In 1999, we established an ESOP. When
the Bank converted to the stock form of ownership, the ESOP purchased 85,825
shares of our common stock. The Company loaned $429,125 to the ESOP to purchase
that stock. Substantially all employees of the Bank or the Company who have
attained age 21 and have completed one year of service become participants in
the ESOP.

The Company and the Bank intend to contribute to the ESOP enough money
to cover the payments due by the ESOP on the loan from the Company. The loan
requires annual principal and interest payments which repay the loan over 10
years. The loan permits optional pre-payment. The Company and the Bank may
contribute more to the ESOP than is necessary to repay the loan.

The ESOP pledged the shares it purchased as collateral for the loan.
The ESOP allocates those shares among participants as the loan is repaid. If the
Bank repays the ESOP loan as scheduled, the number of shares released is based
on the amount of principal repaid that year and will be fully allocated over the
ten year term of the loan. The ESOP allocates shares among participants, as they
are released from the lien of the ESOP loan, generally based on each
participant's share of total taxable compensation for the year. Benefits
generally vest at the rate of 20% per year beginning after the participant's
first year of service, with 100% vesting after five years of service. Employees
receive credit for service prior to the Bank's mutual holding company
reorganization for vesting purposes. Participants are immediately vested upon
termination of employment due to death, retirement at age 65 or older, permanent
disability or upon the occurrence of a change of control. Forfeitures (shares
allocated to an employee which are not yet vested when that employee's
employment terminates) will generally be reallocated among remaining
participating employees, in the same proportion as contributions (based upon the
proportion of the employee's allowable compensation to that of all employees) or
used to repay the ESOP loan. Vested benefits may be distributed in a single sum
or installment payments and are payable upon death, termination of employment or
attainment of age 65, subject to certain rights to elect to defer the
distribution of benefits.

Richard F. Bennett and Robert J. Twyman are the trustees for the ESOP.
A total of 39,509 shares have been allocated by the ESOP to date to employees,
and the trustees, subject to their fiduciary duty, must vote all allocated
shares held in the ESOP as the employees to whom the shares have been allocated
instruct them. Allocated shares for which no instructions are received and
shares not yet allocated are voted generally in the same proportion as allocated
shares for which voting instructions are received. The Personnel Committee of
the Company oversees the Company's activities related to the ESOP.

The ESOP may purchase additional shares of our stock in the future, in
the open market or otherwise, and may do so either with borrowed funds or with
cash dividends, employer contributions or other cash flow.

Stock Option Plan. Under the SOP, we may award options to purchase up
to 107,281 shares of the Company's common stock. The term of the stock options
may not exceed ten years, and options can only be

exercised before they expire. No options may be granted by the Company under the
SOP after August 17, 2009, which is ten years after our Board approved the SOP.
The Personnel Committee may award either "incentive stock options" as defined
under Section 422 of the Code, or stock options not intended to qualify as such
("non-qualified options").

As of the record date, there were 56,275 options outstanding, which
were awarded to directors and officers of the Company, of which 50,275 have
vested. Two directors and one executive officer exercised a total of 5,225
options in fiscal 2004 and a total of 7,475 options have been exercised as of
the Record Date. Options available for grant are 43,531. As of September 30,
2004, the aggregate fair market value of the 100,931 shares not yet issued under
the SOP was $1,413,034, based on the closing sales price per share of the
Company's common stock of $14.00 on the AMEX on that date.

Management Recognition Plan. Like the SOP, the MRP is designed to help
the Company and the Bank attract and retain directors, officers and employees by
giving them a proprietary interest in the Company. Under the MRP, we may grant
awards of up to 42,912 shares of our common stock. We have awarded 25,300 shares
of restricted stock under the MRP, of which 22,900 are vested. As of September
30, 2004, the aggregate fair market value of the shares authorized for award
under the MRP was $472,032, based on the latest closing sales price per share of
the Company's common stock of $14.00 on the AMEX on that date. The MRP prohibits
the vesting of restricted stock awards at a rate in excess of 20% per year
beginning from the date of their grant, except in the event of the death or
disability of the award recipient. The recipient of an award is not required to
make any payment to the Company or the Bank in exchange for the shares and as
the award vests, the vested shares will be the same as any other issued and
outstanding shares of common stock of the Company.

Pension Plan. Neither the Bank nor the Company maintains a defined
benefit pension plan for eligible employees.

Personnel Committee Report on Executive Compensation

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

General Policy Considerations. For fiscal 2004, the compensation of Mr.
Bennett, the Chief Executive Officer, was determined by the Personnel Committee
of the Bank. The committee, in evaluating compensation for Mr. Bennett,
considered the nature of his responsibilities, length of service, competitive
salaries in banking and other industries, quality of performance, the
performance of the Bank officers and employees working under his supervision,
challenges faced since the reorganization of the Bank and special projects or
unusual difficulties affecting work load and performance. The committee also
considered the additional challenges faced by Mr. Bennett in connection with the
establishment of the full service branch office in Alexandria Bay, New York and
the loan production office in Clayton, New York. The committee also evaluated
the Bank's performance during fiscal 2004.

This report is included herein at the direction of the members of the
Personnel Committee, directors Langevin (Chairman), Jones, Leader, Monroe,
Pistolesi and Straw.

Personnel Committee Interlocks and Insider Participation

The Personnel Committees of the Bank and the Company consist of
directors Jones, Langevin, Leader, Monroe, Pistolesi and Straw. None of these
individuals is or has been an officer or employee of the Company or the Bank.
When the Board of Directors functions on matters pertaining to the compensation
of Mr. Bennett, he does not participate in the deliberations or vote by the
Board.

Transactions with Directors and Officers.

The directors and the executive officers of the Bank maintain normal
deposit account relationships with the Bank on terms and conditions no more
favorable than those available to the general public. In the ordinary course of
business, the Bank may make loans to directors, officers and employees. All
loans to directors, executive officers and related parties are on substantially
the same terms, including interest rate and collateral, as those prevailing at
the same time for comparable loans to other customers and do not involve more
than normal risk of collectibility or present other unfavorable features.

Director Robert J. Leader is a Partner of the law firm of Case & Leader
LLP, which provides legal services to the Bank on a variety of lending,
litigation and other general banking matters. The total amount paid to Case &
Leader LLP by the Bank was approximately $94,550 during fiscal 2004, which
represents fees on most loan closings handled by that law firm paid directly by
the Bank on behalf of the borrowers.

Stockholder Return Performance Graph

--------------------------------------------------------------------------------
Gouverneur Bancorp Inc.
--------------------------------------------------------------------------------

Total Return Performance

[GRAPHIC OMITTED]

Period Ending
-----------------------------------------------------------
Index 09/30/99 09/30/00 09/30/01 09/30/02 09/30/03 09/30/04
------------------------------------------------------------------------------------------

Gouverneur Bancorp Inc. 100.00 113.02 182.97 227.08 248.62 322.56
NASDAQ Composite 100.00 133.99 54.83 43.04 65.92 70.35
SNL Thrift Index 100.00 121.65 164.31 172.93 239.75 276.96
SNL <$250M Thrift Index 100.00 99.31 130.49 161.52 222.50 238.93

Source : SNL Financial LC, Charlottesville, VA (434) 977-1600
(c) 2004

Set forth above is a line graph comparing the cumulative total stockholder
return on Gouverneur Bancorp, Inc. common stock with cumulative stockholder
return of a broad market index including (i) the total return industry index for
SNL All Thrift stocks (SNL is a firm that compiles and distributes financial
information); (ii) the NASDAQ total return for the U.S. Stock Market; and (iii)
as a peer group comparison, SNL's total return index for thrifts with assets
less than $250 million. In accordance with SEC guidelines, the closing price of
a share of our common stock on September 30, 1999 was used to establish the
initial point in the performance graph. The closing price on that date was
$4.875. If the initial offering price of $5.00 is used, the cumulative
stockholder return would have been approximately 214.5% through September 30,
2004.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who beneficially own
more than 10% of any class of the Company's equity securities to file with the
SEC initial reports of ownership, and reports of changes in ownership of the
Company's common stock generally, as now required, by the second business day
following a reportable transaction (e.g., acquisition or disposition of
securities). Officers, directors and greater than 10% stockholders are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.

To the Company's knowledge, based upon a review of all reports
furnished to the Company during fiscal year 2004, all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with by such persons.

II. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Company's Board of Directors appointed Beard Miller Company LLP of
Harrisburg, Pennsylvania as independent public accountants to audit the
consolidated financial statements of the Company for the fiscal year ending
September 30, 2005, subject to ratification by the stockholders at the meeting.
Beard Miller Company LLP, has been engaged by the Company and the Bank since
December 2002 to audit the consolidated financial statements.

A representative of Beard Miller Company LLP is expected to be present
at the meeting and will have an opportunity to make a statement if he or she
wishes to do so. We also expect that the representative will be available to
answer appropriate questions from stockholders.

OTHER BUSINESS

We have no reason to believe that any other business will be presented
at the meeting, but if any other business shall be presented, the Board of
Directors, as the holder of the proxies solicited by this Proxy Statement, will
vote on such matters in accordance with its judgment.

GENERAL

We are distributing our Annual Report for fiscal year 2004 with this
Proxy Statement to stockholders of record on the Record Date. The Annual Report
is not part of the proxy solicitation material.

If you submit a properly completed proxy card to the Company on the
form distributed with this Proxy Statement, it will be voted if received before
the voting is closed at the meeting. The proxy will be voted in the manner
directed on the proxy card. If the proxy card is signed and returned but no
directions are given, the proxy will be voted "FOR" the two director nominees
and the ratification of the appointment of the independent public accountants.

The cost of this Proxy Statement and the related proxy solicitation
will be borne by the Company. In addition, directors, officers and employees of
the Company and the Bank may solicit proxies personally, by telephone or by
other means without additional compensation. The Company will, upon the request
of brokers, dealers, banks and voting trustees, and their nominees, who were
holders of record of shares of the Company's capital stock or participants in
depositories on the Record Date, bear their reasonable expenses for mailing
copies of this Proxy Statement with Notice of Annual Meeting and the form of
proxy card to the beneficial owners of such shares.

STOCKHOLDER PROPOSALS AT THE ANNUAL MEETING IN THE YEAR 2006

The Company's Board of Directors will establish the date for the 2006
Annual Meeting of Stockholders. In order for a stockholder to be entitled, under
the regulations of the SEC, to have a stockholder proposal included in the
Company's Proxy Statement for the 2006 meeting, the proposal must be received by
the Company at its principal executive offices, 42 Church Street, Gouverneur,
New York 13642, Attention: Charles Van Vleet, Secretary, at least 120 days in
advance of the date in the year 2006 when we first release the Proxy Statement
to stockholders. The stockholder must also satisfy the other requirements of SEC
Rule 14a-8. Note that this filing requirement is separate from the notice
requirements described in this proxy statement regarding the advance notice that
is required before a stockholder is permitted to offer a proposal for a vote at
any stockholders' meeting.

The Company will furnish, without charge to any stockholder submitting a written
request, a copy of the Company's annual report on Form 10-KSB for fiscal year
2004 required to be filed with the SEC. Such written request should be directed
to Charles Van Vleet, Secretary, at our address stated above. The Form 10-KSB
report is not a part of the proxy solicitation materials.

PLEASE SIGN, DATE AND MAIL YOUR PROXY NOW

Gouverneur, New York
January 12, 2005

[X] PLEASE MARK VOTES REVOCABLE PROXY With- For All
AS IN THIS EXAMPLE GOUVERNEUR BANCORP, INC. For hold Except

THIS PROXY IS SOLICITED ON BEHALF OF 1. ELECTION OF DIRECTORS [ ] [ ] [ ]
THE BOARD OF DIRECTORS.
Robert J. Leader
Larry Straw

The undersigned hereby appoints the INSTRUCTION: To withhold authority to vote for any
Board of Directors of Gouverneur individual nominee, mark "For All Except" and write
Bancorp, Inc., or their successors in that nominee's name in the space provided below.
office, Proxies, with full power of
substitution, to represent and vote all ---------------------------------------------------
stock that the undersigned is entitled
to vote at the Annual Meeting of 2. The ratification of the For Against Abstain
Stockholders of Gouverneur Bancorp, appointment of Beard [ ] [ ] [ ]
Inc., to be held on February 14, 2005 Miller Company LLP as the
beginning at 10:00 a.m. at the Executive independent public accountants
Offices of Gouverneur Savings & Loan for the fiscal year ending
Association, 26 John Street, Gouverneur, September 30, 2005.
New York, or at any adjournments thereof
upon the matters described in the
accompanying Proxy Statement and upon THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
other business that may properly come YOU VOTE "FOR" BOTH OF THE PROPOSALS. PLEASE SIGN,
before the meeting or any adjournment DATE AND RETURN THIS PROXY.
thereof. Said Proxies are directed to
vote or refrain from voting as marked THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO
hereon upon the matters listed herein, DIRECTION IS SPECIFIED, THIS PROXY WILL BE VOTED
and otherwise in their discretion. "FOR" THE PROPOSALS. IF ANY OTHER BUSINESS IS
PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED
BY THOSE NAMED IN THIS PROXY IN THEIR JUDGMENT AND
DISCRETION. AT THE PRESENT TIME, THE BOARD OF
THIS PROXY MAY BE REVOKED AT ANY ---------- DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE
TIME BEFORE IT IS VOTED. PLEASE |DATE | PRESENTED AT THE MEETING.
DATE, SIGN AND RETURN IN THE | |
ENCLOSED POSTAGE-PAID ENVELOPE. | |
--------------------------------------------
| |
| |
| |
| |
--Signature------Signature if held jointly--

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[GRAPHIC OMITTED] Detach above card, sign, date and mail in [GRAPHIC OMITTED]
postage-paid envelope provided.

GOUVERNEUR BANCORP, INC.

--------------------------------------------------------------------------------
| THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED. PLEASE DATE, |
| SIGN AND RETURN IN THE ENCLOSED POSTAGE-PAID ENVELOPE |
| |
| Please sign exactly as your name appears on this card. When shares are |
| held by joint tenants, both should sign. When signing as attorney, |
| executor, administrator, trustee or guardian, please give full title |
| as such. If a corporation, please sign in full corporate name by |
| President or other authorized officer. If a partnership, please sign |
| in partnership name by authorized person. |
| |
| PLEASE ACT PROMPTLY |
| SIGN, DATE & MAIL YOUR PROXY CARD TODAY |
--------------------------------------------------------------------------------

IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.

___________________________________________